Stakeholders in Human Resources

HSC Business Studies | Free Study Notes

Stakeholders in human resources are the groups and individuals affected by HR decisions in a business. In HSC Business Studies, this topic sits within Topic 4: Human Resources and helps explain why managing employees involves balancing the interests of employers, employees, unions, government organisations and society.

Human resource management is not just an internal business issue. Decisions about pay, working conditions, safety, training and employment affect many stakeholders, so businesses need to manage these relationships carefully.

In this lesson

• what stakeholders in human resources are

• the role of employers and employees

• how employer associations and unions are involved

• the role of government organisations

• why society is affected by HR decisions

Core notes

What are stakeholders in human resources?

Stakeholders are individuals or groups with an interest in the activities and decisions of a business.

In human resources, stakeholders are interested in how employees are managed. This includes issues such as:

• wages and salaries

• working conditions

• training

• workplace safety

• employment contracts

• dispute resolution

• equal opportunity

• job security

Human resource managers need to consider the interests of different stakeholders when making decisions. These interests may support each other, but they can also conflict.

For example, employers may want to control labour costs, while employees may want higher wages. Human resource management must balance these interests in a fair and effective way.

This links closely with legal influences on human resources [Legal Influences on Human Resources], because many stakeholder rights and responsibilities are shaped by workplace laws.

Employers

Who are employers?

Employers are the business owners or managers who hire employees to perform work.

Employers are responsible for managing the workforce and ensuring the business has the right employees to achieve its goals.

Employer interests

Employers are usually interested in:

• productivity

• employee performance

• controlling labour costs

• maintaining workplace discipline

• reducing absenteeism

• reducing staff turnover

• meeting legal obligations

• achieving business goals

Employers want employees to work efficiently and contribute to business success.

For example, an employer may introduce training to improve productivity or use performance management to support better employee performance.

This connects with the strategic role of human resources [Strategic Role of Human Resources], because employers use HR strategies to help achieve long-term business goals.

Employees

Who are employees?

Employees are the people hired by a business to complete work in exchange for wages, salaries or other rewards.

Employees are central to human resource management because HR decisions directly affect their working lives.

Employee interests

Employees are usually interested in:

• fair pay

• safe working conditions

• job security

• reasonable working hours

• training and career development

• fair treatment

• protection from discrimination

• a positive workplace culture

Employees want to be treated fairly and to work in conditions that allow them to perform well.

For example, employees may value flexible work arrangements, training opportunities or clear communication from management.

If employee needs are ignored, a business may experience lower motivation, higher absenteeism, increased disputes and higher staff turnover.

Employer associations

What are employer associations?

Employer associations are organisations that represent the interests of employers.

They may provide advice, support and representation to businesses on workplace matters.

Role of employer associations

Employer associations may help employers by:

• advising on employment laws

• representing employers in industrial relations issues

• helping businesses respond to unions

• providing information about awards and workplace agreements

• supporting employers in workplace disputes

• lobbying government on behalf of business interests

For example, an employer association may advise a business on how to manage wage negotiations or changes to workplace regulations.

Employer associations can be especially useful for businesses that do not have large internal HR or legal teams.

Unions

What are unions?

Unions are organisations that represent employees.

They aim to protect and improve the rights, pay and working conditions of their members.

Role of unions

Unions may support employees by:

• negotiating with employers

• representing employees in disputes

• campaigning for better wages and conditions

• providing advice about workplace rights

• supporting safe and fair workplaces

• taking part in collective bargaining

For example, a union may negotiate with an employer for higher wages or improved safety measures.

Unions are important stakeholders because they can influence the relationship between employers and employees.

This links with workplace disputes [Workplace Disputes], because unions may become involved when employees and employers cannot resolve an issue directly.

Government organisations

Why government organisations are stakeholders

Government organisations are involved in human resources because they help set and enforce workplace rules.

They aim to ensure workplaces are fair, safe and legally compliant.

Role of government organisations

Government organisations may be involved in:

• setting minimum employment standards

• enforcing workplace laws

• resolving workplace disputes

• supporting work health and safety

• protecting employees from discrimination

• regulating pay and conditions

For example, government organisations may help ensure employees receive minimum entitlements, such as leave, minimum wages and safe working conditions.

Government organisations are important because they create the legal framework that employers and employees must follow.

This connects with employment contracts [Employment Contracts], because contracts must operate within legal requirements.

Society

Why society is a stakeholder in human resources

Society is a stakeholder because HR decisions can affect the wider community.

Businesses do not operate separately from the society around them. Employment decisions can influence living standards, equality, workplace safety and community wellbeing.

How HR decisions affect society

Human resource decisions may affect society through:

• job creation

• unemployment

• workplace safety standards

• fair treatment of workers

• diversity and inclusion

• ethical employment practices

• income levels in the community

• social expectations about work-life balance

For example, a business that provides fair pay, safe work and training opportunities can contribute positively to society. A business that underpays workers or ignores safety may damage its reputation and harm the wider community.

This links with ethical business behaviour [Ethical Business Behaviour], because businesses are expected to consider more than just profit when managing employees.

Conflicting stakeholder interests

Stakeholders in human resources often have different priorities.

For example:

• employers may want to reduce labour costs

• employees may want higher pay

• unions may want stronger employee protections

• government organisations may focus on legal compliance

• society may expect ethical and socially responsible behaviour

A business needs to manage these interests carefully. Poor management can lead to disputes, low morale, reputational damage or legal consequences.

Effective human resource management aims to balance business goals with fair treatment of employees and responsible workplace practices.

Worked example

Exam-style question

Explain how two stakeholders may influence human resource management in a business.

Sample answer

Employees can influence human resource management because they are directly affected by decisions about pay, working conditions and training. If employees are dissatisfied with their working conditions, absenteeism and staff turnover may increase. As a result, the business may need to improve communication, provide training or adjust workplace conditions to maintain motivation and productivity.

Unions can also influence human resource management by representing employees in negotiations or workplace disputes. For example, a union may negotiate with an employer for improved wages or safer working conditions. This can affect HR decisions because the business must consider employee concerns while still managing costs and achieving business goals.

Common mistakes

• Thinking stakeholders in HR only means employees.

• Forgetting that employers are also stakeholders.

• Confusing employer associations with unions.

• Writing about government generally without linking it to workplace rules.

• Ignoring society as a stakeholder in employment decisions.

Quick quiz

1. What is a stakeholder in human resources?

2. Give two interests employers may have in HR decisions.

3. Why are employees important stakeholders in human resources?

4. What is the role of unions?

5. How can society be affected by human resource management decisions?

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