COMPAK | BUSINESS MANAGEMENT UNIT 3

BUSINESS MANAGEMENT UNIT 3

Unit 3, Outcome 2 assessment task: structured questions

KATHY AMBATZIS | canterbury girls’ secondary college

GILLIAN SOMERS | education consultant

The following assessment task for Outcome 2 in VCE Business Management Unit 3 (Managing a Business) focuses on the essential factors involved in effectively managing employees so that business objectives are achieved.

The assessment task addresses motivation theories and strategies as well as factors contributing to workplace relations.

ASSESSMENT TASK DETAILS

Name of task

Structured questions

Unit/area of study

Unit 3: Managing a Business

Area of Study 2: ‘Managing employees’

Outcome 2

‘Explain theories of motivation and apply them to a range of contexts, and analyse and evaluate strategies relating to the management of employees.’

Source: VCE Business Management Study Design (2017-2021), VCAA, page 17

INSTRUCTIONS AND CONDITIONS

Answer all questions in this answer book. The marks for each question are indicated after each question. Additional space is available following the questions if you need extra paper to complete an answer. Clearly label all answers with the appropriate question number.

Conditions: Closed book

Time allowed: 80 minutes (plus 10 minutes reading time)

Marks allocated: 40 marks

Questions

Question 1 (6 marks)

Read the following extract and answer the questions below.

Caffix Coffee has established itself as a highly credible Australian coffee brand producing a wide range of specialty coffee products for home, bar, cafe and office consumption. It roasts and packages single-origin coffee beans and ground coffee with a strong focus on using quality sourced beans and unique brewing methods for both the local and international coffee markets.

Over the past five years, Caffix Coffee has experienced growing competitive pressures that have contributed to its ongoing profit decline and reduced market share. Australia’s coffee culture has experienced a surge in the number of small boutique coffee houses that offer a wider range of fine coffees. The broader coffee market has been affected by the fast growth of single serve coffee capsules/pods that are being produced by some of the world’s leading coffee manufacturers, such as Nespresso.

Caffix Coffee’s management has met to discuss future strategies but has not been open about the business’s strategic goals and direction. As a result, employees are feeling uncertain about the lack of communication and think the business lacks leadership. To reduce production costs, some redundancies have occurred and training and development opportunities have been reduced. This has resulted in a less focused and motivated workforce who are also concerned about their job security. Staff turnover has grown as a result of the increased pressure management has placed on employees to meet unrealistic workload expectations. No incentives or rewards have been offered to employees who feel that their efforts are not being recognised or rewarded. Also some employees believe there will be limited career advancement opportunities.

In order to increase competitiveness and market share, newly appointed Chief Executive Officer (CEO) Christian Jackson, recently announced a five-year restructure project focusing on improving the business’s global coffee market share. Jackson proposes undertaking a major investment to launch Caffix Coffee’s own brand of fair trade-certified organic and sustainable coffee capsules. To achieve this goal, a renewed focus by the Human Resource Manager will be required to implement strategies that will boost employee morale and productivity, and foster innovation for the success of the new line of coffee products.

a.Define the term ‘motivation’ and explain its relationship to employee productivity and the achievement of business goals and objectives.2 marks

b.Discuss the effectiveness of implementing Maslow’s Hierarchy of Needs theory to increase the motivation of employees at Caffix Coffee.4 marks

Question 2 (5 marks)

Describe Lawrence and Nohria’s Four Drive Theory and explain the different strategies that can be used by the Human Resource Manager to ensure that Caffix Coffee is satisfying all four drives to increase employee motivation.

Question 3 (4 marks)

a. Explain the impact of performance-related pay on the short-term and long-term motivation of employees.2 marks

b. Explain the impact of investment in training on the short-term and long-term motivation of employees.2 marks

Question 4 (3 marks)

Explain the importance of implementing an effective performance management system in businesses such as Caffix Coffee.

Question 5 (5 marks)

a. Propose and describe two strategies that Caffix Coffee could implement to ensure that redundancy arrangements for some of the employees are handled in an appropriate manner.3 marks

b. Caffix Coffee intends to introduce a new line of coffee products. As a training consultant you have been asked to propose and justify one training option that would be appropriate to train the employees in this new line of coffee products.2 marks

Question 6 (17 marks)

Read the following extract and answer the questions below.

On 18 January 2017, 60 production and maintenance workers were locked out of the Parmalat dairy processing plant at Echuca in northern Victoria due to a dispute relating to an enterprise agreement. Parmalat and the Australian Manufacturing Workers Union (AMWU) had been undertaking ‘good faith’ negotiations for the past six months. The union has now accused the business of trying to cut wages and conditions at the workplace and planned to conduct a four-hour strike at the plant. Parmalat was disappointed with the union’s approach and has taken the tough decision to close the site indefinitely.

a. For each of the two types of industrial action listed below, identify which party to an industrial dispute takes this action and describe the main purpose of the action.2 marks

i.strike

iilockout

b. Describe the role of the Fair Work Commission when an employer and its employees fail to reach an agreement to determine the wages and conditions for that workplace.2 marks

c. Describe the role of the following three participants in the workplace.3 marks

i.human resource managers

ii.unions

iii.employer associations

d.In Australia, employees working for businesses can be employed under any of the follow three types of agreements:

i.industry-wide awards

ii.workplace agreements

iii.individual contracts.

Compare the three types of employment arrangements under which Australian employees can be employed.6 marks

e.Analyse and evaluate whether the satisfactory negotiation and adoption of a workplace agreement between Parmalat and the Australian Manufacturing Workers Union (AMWU) will achieve the objectives of increasing Parmalat’s productivity levels and the business’s employees achieving better pay and working conditions.4 marks

Total: 40 marks

Extra space for responses

Clearly number all responses in this space

Suggested answers

Question 1 (6 marks)

a.Define the term ‘motivation’ and explain its relationship to employee productivity and the achievement of business goals and objectives.2 marks

Sample answer:

Motivation is the level of energy, commitment, willingness and creativity that an employee brings to their job or in the completion of work tasks. Motivation levels have a direct impact on productivity levels. Employees who are highly motivated, feel good about their jobs and carry out their responsibilities to the best of their ability, should achieve increased levels of productivity. This in turn helps businesses achieve their strategic goals and objectives.

Marking guide:

1 mark for defining motivation

1 mark for explaining the relationship between motivation, productivity and achievement of business goals and objectives

b.Discuss the effectiveness of implementing Maslow’s Hierarchy of Needs theory to increase the motivation of employees at Caffix Coffee. 4 marks

Sample answer:

Maslow’s Hierarchy of Needs theory is based on the idea that employees are motivated by satisfying a hierarchy of five needs arranged in order. These needs include the lower level extrinsic needs, such as physiological, safety and security needs being met first before satisfying the higher order intrinsic needs, such as social, self-esteem and self-actualisation needs. Each level of need acts as a motivator for employees until it has been met by the employer. Once it is achieved it no longer motivates.

An advantage of this theory is that Maslow believed that every individual employee’s needs were different so the Human Resource Manager could therefore offer a number of different strategies to satisfy needs and improve motivation for a wide range of staff. At Caffix Coffee, Maslow’s theory can be effective as the threat of job security means that lower order needs can be satisfied first. If the restructure is successful, then higher order needs, such as self-esteem can be fulfilled by offering training and development opportunities to employees, or satisfying self-actualisation needs by involving employees in decision-making regarding product innovation.

However, a disadvantage of implementing this theory is that it can be time-consuming. It requires the Human Resource Manager to consult with each employee to determine their level of need on the hierarchy and then plan accordingly to ensure that it is met.

Marking guide:

2 marks for outlining features of Maslow’s theory

2 marks for outlining an advantage and a disadvantage of Maslow’s theory as it applies to Caffix Coffee

Question 2 (5 marks)

Describe Lawrence and Nohria’s Four Drive Theory and explain the different strategies that can be used by the Human Resource Manager to ensure that Caffix Coffee is satisfying all four drives to increase employee motivation.

Sample answer:

The Four Drive Theory states that there are four main drives that motivate employees. These are the drives to ‘acquire and achieve’, to ‘bond and belong’, to be ‘challenged and comprehend’, and to ‘define and defend’.

The drive to acquire and achieve is primarily satisfied through a business’s reward system. At Caffix Coffee, management can ensure that it develops a reward system that recognises top performers from average performers by offering pay above the industry standard and recognising outstanding performance.

The drive to bond and belong is mostly met through an organisation’s culture. At Caffix Coffee the culture can be enhanced by embracing teamwork and collaboration between peers and encouraging the development of friendships and bonding through socialisation activities.

The drive to be challenged and comprehend is fulfilled primarily through job structure. At Caffix Coffee it needs to ensure that its various job roles stimulate and challenge employees or provide them with opportunities to grow. Suggested strategies include job sharing/rotational opportunities that provide new challenges and training opportunities that provide employees with new skills and knowledge.

The drive to define and defend is met through an employee feeling aligned and connected to the business. At Caffix Coffee this can be done by creating a vision and fair and transparent processes that help to overcome fear and the need to defend. Suggested strategies include adopting a participative management style that encompasses open communication, fair and ethical work practices, and establishing a performance management system that provides direction and is trusted by employees.

Marking guide:

1 mark for outlining the Four Drive Theory

4 marks for describing strategies that cover all four drives and their application to the case study

Question 3 (4 marks)

a. Explain the impact of performance-related pay on the short-term and long-term motivation of employees.2 marks

Sample answer:

Performance-related pay is where employers give financial rewards to individual employees based on their effort and performance in meeting business goals. Many employees need recognition to produce quality work and bonuses, sales commission and profit sharing are examples of rewarding employees whose work is above standard.

Performance-related pay is better linked to the achievement of short-term motivation as it is considered an extrinsic reward that encourages higher efforts from employees, particularly from junior ranked employees at the lower end of the pay scale. In the long-term; however, as employees become more highly paid, financial rewards become less important and other needs, such as their self-esteem and career advancement become more important as motivators.

Marking guide:

1 mark for explaining performance-related pay as a short-term motivator

1 mark for explaining performance-related pay as a long-term motivator

b. Explain the impact of investment in training on the short-term and long-term motivation of employees.2 marks

Sample answer:

Investment in training focuses on the ongoing development of employees’ knowledge and skills to improve their performance. At Caffix Coffee investing time and money on training programs will ensure employees feel valued and empowered to strive to do their best, allowing for greater job satisfaction and helping to reduce staff turnover, both in the short-term and long-term. However, in the long-term some employees, who have acquired higher skills, might leave for better paid jobs. Caffix Coffee can take action to curb these departures and get a return on their training investment by providing suitable job opportunities for employees to use their enhanced knowledge and skills.

Marking guide:

1 mark for explaining investment in training as a short-term motivator

1 mark for explaining investment in training as a long-term motivator

Question 4 (3 marks)

Explain the importance of implementing an effective performance management system in businesses like Caffix Coffee.

Sample answer:

The fundamental goal of performance management is to promote and improve employee effectiveness and their overall contribution to the business. It is a continuous process where managers and employees work together to plan, monitor and review an individual employee’s work objectives and link them to the achievement of the business’s goals and objectives.

It is important to implement an effective performance management system as it helps to improve communication between management and employees, particularly during performance appraisal meetings. This is an opportunity to evaluate how effectively employees are fulfilling their responsibilities and for management to consider how best to support and develop employees towards the attainment of business objectives. If Caffix Coffee wants to successfully implement its plans to expand globally, it needs to focus on applying an effective performance management system that will boost employee morale, productivity and foster innovation.

Marking guide:

1 mark for explaining performance management

2 marks for describing the importance of performance management to business success and its application to the case study

Question 5 (5 marks)

a. Propose and describe two strategies that Caffix Coffee could implement to ensure that redundancy arrangements for some of the employees are handled in an appropriate manner.3 marks

Sample answer:

It is a stressful experience to lose your job, particularly when the cause of your redundancy is not poor performance. There are a number of strategies that Caffix Coffee can implement to support redundant employees in their transition from leaving the business to finding a new job.

One strategy is to offer a generous redundancy package. This would include all of the entitlements legally owed to an employee, such as accrued annual leave, plus a payout based on what is stipulated in the employee’s conditions of employment (employment contract). This is typically a certain number of weeks’ pay per year of service. Caffix Coffee would also be wise to extend the notification period of time it must give to employees on their termination so they have plenty of time to make other employment or personal arrangements.

A second strategy is the provision of outplacement services to the employees who are being made redundant. Outplacement services assist retrenched employees to gain new work and provide counselling to help them cope with the stress of losing their job. They also run skill-development programs in areas such as resume writing and interview techniques, and they can offer office space and access to facilities to organise interviews. The costs associated with the service would be paid by Caffix Coffee. This would send a strong message to the remaining employees that Caffix Coffee cares about them.

Marking guide:

2 marks for describing two relevant strategies

1 mark for linking the strategies to Caffix Coffee’s circumstances

b.Caffix Coffee intends to introduce a new line of coffee products. As a training consultant you have been asked to propose and justify one training option that would be appropriate to train the employees in this new line of coffee products.2 marks

Sample answer:

An appropriate training option for Caffix Coffee would be a coaching/mentoring program. This would initially involve a group of selected employees receiving training from specialists in the new coffee products. They in turn would become coaches/mentors to other team members. This would be the most cost-effective training option for Caffix Coffee as they would only be paying for a small selected group to be trained and then using this group to provide on-the-job training for other employees.

Marking guide:

1 mark for describing a training option

1 mark for justifying the appropriateness of the training option for Caffix Coffee

Question 6 (17 marks)

a.For each of the two types of industrial action listed below, identify which party to an industrial dispute takes this action and describe the main purpose of the action.2 marks

i.strike

Sample answer:

A strike involves a deliberate withdrawal of labour from the production process by employees, often organised by a union. The usual purpose of this action is to compel an employer to comply with particular demands of employees regarding terms and conditions of employment.

ii.lockout

Sample answer:

A lockout is an employer’s response to protected industrial action whereby the employer suspends or restricts work by stopping workers entering a plant or building to perform their work. This form of industrial action is usually taken when management believes that negotiations with workers and their bargaining agents (often unions) have reached a stalemate and may need to be referred to a third party (Fair Work Commission) to assist them resolve the industrial conflict. Its purpose is to enforce the current terms and conditions of employment that are in dispute.

Marking guide:

1 mark for identifying both the party taking the action and describing the purpose of a strike

1 mark for identifying both the party taking the action and describing the purpose of a lockout

b. Describe the role of the Fair Work Commission when an employer and its employees fail to reach an agreement to determine the wages and conditions for that workplace.2 marks

Sample answer:

Enterprise agreements made under the Fair Work Act require the parties to include a dispute resolution clause in the agreement. This clause sets out a procedure that requires or allows either the Fair Work Commission or some other independent person to settle a dispute. The Commission can settle a dispute via mediation or conciliation. A mediated or conciliated outcome occurs where the parties use the services of the Fair Work Commission as an independent mediator or conciliator to help them arrive at their own agreement. In this case, the Commission could have acted as an independent mediator bringing the two parties together (Parmalat and the AMWU representing the workers at Parmalat) to try and come to a mutually acceptable agreement relating to the dispute.

If mediation or conciliation does not result in a mutually acceptable agreement, then the Fair Work Commission, if the parties agree, may deal with the matter by arbitration. This involves the Commission arbitrating by listening to both sides of the dispute and then making a decision based on the arguments put forward by the parties. The decision of the Commission will be legally binding on the parties.

Marking guide:

1 mark for outlining the role of the Fair Work Commission

2 marks for describing role of the Fair Work Commission as a mediator, conciliator or arbitrator when the parties to a new enterprise agreement are unable to reach agreement

c. Describe the role of the following three participants in the workplace. 3 marks

i.human resource managers

Sample answer:

Human resource managers have specialist knowledge in the area of workplace/employee relations. Their role is to provide advice and support to managers and employees and to work closely with other departments to create an harmonious and productive workplace that is staffed by motivated, skilled and fulfilled employees. They administer the day-to-day procedures relating to pay and leave entitlements, participate in dispute resolution, act as intermediaries between employees/unions and management and actively participate in the negotiations for establishing enterprise agreements at a workplace.

ii. unions

Sample answer:

Unions perform the role of representing and protecting the common interests of workers in all matters relating to their employment. Unions usually represent employees from a particular industry, such as the workers in the manufacturing industry. Unions have achieved significant changes and improvements in the workplace for employees, such as annual leave, pensions, superannuation, and maternity and paternity leave.

iii. employer associations

Sample answer:

Employer associations are groups of employers who unite to promote a common interest in workplace relations matters. They share information and provide mutual support to each other and represent employers in cases before the Fair Work Commission. Employer associations can also represent employers during collective bargaining over wages and working conditions.

Marking guide:

1 mark for describing each of the listed roles

d.In Australia, employees working for businesses can be employed under any of the following three types of agreements:

i.industry-wide awards

ii.workplace agreements

iii.individual contracts.

Compare the three types of employment arrangements under which Australian employees can be employed.6 marks

Sample answer:

An industry-wide award is a legally binding agreement made by the Fair Work Commission arising from submissions made to it by employers, unions and other peak bodies. It sets out the minimum pay and working conditions for employees within a particular industry or occupation. There are 10 entitlements in the National Employment Standards (NES) that have to be provided to all employees.

A workplace agreement results from a period of good faith bargaining at a workplace between employees and the employer. The agreement covers pay and working conditions and incorporates the 10 entitlements in the NES. The Fair Work Commission provides approval for the agreement.

An individual contract is an agreement made directly between an employer and an employee that covers working conditions and remuneration. The employee and the employer negotiate the terms and conditions of the contract and any dispute arising from the contract is enforced through the courts.

All three agreements set out minimum wages and conditions; however, while individual contracts set out the minimum wages and conditions for an individual person, industry-wide awards and workplace agreements set out the minimum wages and conditions for groups of people. In addition, industry-wide awards set out the wages and working conditions for an industry as a whole, while workplace agreements set out the wage and working conditions for a particular workplace. All three types of industrial agreements cannot cover less than the national minimum wage or provide for less than the NES.

A workplace agreement is one that has been determined by the process of bargaining and determines the terms and conditions of employment through direct negotiation between unions (acting as bargaining agents) and/or a collective group of employees with employers relating to a particular workplace or industry. This is similar to the direct negotiations that occur between an individual and their workplace when they agree to an individual contract; however, industry-wide awards arise from submissions made by employers, unions and other peak bodies and are made by the Fair Work Commission, which makes the legally binding agreement that covers the whole of the respective industry.

Marking guide (global):

1 to 3 marks for describing briefly the three types of employment agreements

4 marks for describing the three types of employment agreements, including the basic points of comparison

5 marks for describing the three types of employment agreements, including a more detailed comparison

6 marks for describing the three types of employment agreements, including a comprehensive comparison clearly detailing similarities and differences

e.Analyse and evaluate whether the satisfactory negotiation and adoption of a workplace agreement between Parmalat and the Australian Manufacturing Workers Union (AMWU) will achieve the objectives of increasing Parmalat’s productivity levels and the business’s employees achieving better pay and working conditions.4 marks

Sample answer:

The parties negotiating the terms and conditions of a successful workplace agreement need to openly communicate with each other. After six months of discussions, it would appear that the negotiations have broken down. The AMWU is accusing Parmalat of wanting to cut wages and working conditions for the employees. However, Parmalat believes that their current offer is fair and reasonable. The breakdown in negotiations resulted in the AMWU threatening to take strike action and Parmalat enforcing a lockout.

As Parmalat has not closed the site permanently opportunities still exist for an agreement to be reached. If discussions recommenced, both parties would need to display a desire to mutually agree on a workplace agreement in order for them to achieve their objectives and conditions.

Marking guide (global):

1 mark for describing an enterprise/workplace agreement and its purpose

1 mark for explaining its relationship to achieving objectives of either the business and/or its employees

1 mark for analysing if an enterprise agreement (workplace agreement) can achieve the objectives of both parties (employer and employees)

1 mark for evaluating the prospect of an enterprise agreement (workplace agreement) achieving the objectives of both parties (employer/Parmalat and employees/AMWU)

Teacher notes

Teachers can break this assessment task into two parts—Part A: Questions 1–5; Part B: Question 6 a-e. This will require amendments to the timing and mark allocations for both parts.

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Disclaimer: This assessment task has been written by the authors (Kathy Ambatzis and Gillian Somers) for use with students of VCE Business Management. This does not imply that it has been endorsed by the Victorian Curriculum and Assessment Authority (VCAA). The current VCE Business Management Study Design (2017–2021) can be accessed directly via the VCTA website. VCE is a registered trademark of VCAA. While every care is taken, we accept no responsibility for the accuracy of information or advice contained in Compak. Teachers are advised to preview and evaluate all Compak classroom resources before using them or distributing them to students.

vcta.asn.au | published March 2017 | © VCTA, Kathy Ambatzis and Gillian Somers | 21