Effectiveness of HRM: corporate culture, benchmarking, staff turnover, absenteeism, accidents, disputation and worker satisfaction (HSC Business Studies)

Marking guidelines

2 marks: sketches in general terms how corporate culture can affect staff turnover. 1 mark: provides relevant information about corporate culture or staff turnover.

Sample answer (NESA)

"Corporate culture reflects the beliefs and values that are shared amongst employees in a business. A good corporate culture should reduce staff turnover, as employees will want to work for such a business, as typically, they will feel valued and respected."

Why it earns 2

It defines corporate culture and states the direction of the effect (positive culture, lower turnover) with a reason. You could equally argue the reverse: a toxic culture of blame or excessive pressure raises voluntary resignations.

Source: NESA 2021 HSC Business Studies examination, Question 23(a), and marking guidelines.

Answer: D

Reasoning

Paying per delivery gives drivers a strong incentive to work every shift and deliver more (absenteeism down 30 per cent, deliveries per driver up 25 per cent). But it also rewards speed over safety, so accidents double, and the loss of a secure fixed salary lowers worker satisfaction. Option A would reduce accidents, and option C would be expected to raise satisfaction, so neither fits all four indicators.

Lesson

Read the indicators together: a strategy can improve some indicators while worsening others, and the pattern points to the cause.

Source: NESA 2021 HSC Business Studies examination, Question 15, and marking guidelines (answer key).

Answer: A.

Reasoning. Training on new machinery is primarily a work health and safety measure: operators who know how to use the equipment safely are less likely to be injured. The marking guidelines map this question to "Human resource effectiveness indicators - accidents". The other options could be side benefits, but they are not the main reason.

Source: NESA 2022 HSC Business Studies examination, Question 8, and marking guidelines.

Marking guidelines (top band, 17-20)

"Provides a detailed explanation of the importance to a business of having human resource strategies that reduce workplace disputes and increase worker satisfaction"; "Integrates relevant case study/studies and contemporary business issues"; "Presents a sustained, logical and cohesive response and communicates clearly using relevant business terminology and concepts". Lower bands move from a sound explanation (13-16) to describing (9-12), some reference to strategies (5-8) and limited reference (1-4).

Strategies the guidelines list

Leadership style; job design; recruitment; training and development; performance management; rewards (monetary and non-monetary, individual or group, performance pay); global (costs, skills, supply); workplace disputes resolution (negotiation, mediation, grievance procedures, involvement of courts and tribunals).

How to structure it

Define disputation and worker satisfaction as indicators of HRM effectiveness. Then, for three or four strategies, explain how each reduces disputes or raises satisfaction and why that matters to the business: lower turnover and recruitment costs, lower absenteeism, fewer lost working days, better productivity and quality, and protection of reputation. Integrate a case study, for example the cost of Woolworths' 2024 warehouse strike (about 95 million dollars of Australian Food EBIT in the first half of F25) or Qantas's unlawful 2020 outsourcing of more than 1,800 ground handling jobs (the High Court upheld the finding in 2023; Qantas was required to pay 120 million dollars in compensation and in August 2025 the Federal Court imposed a 90 million dollar penalty).

Source: NESA 2022 HSC Business Studies examination, Question 26, and marking guidelines.

Marks guide (Original, modelled on NESA criteria). 5-6 marks: explains what each indicator measures, how it is measured, what changes suggest about HRM, and the need to benchmark. 3-4 marks: describes the indicators. 1-2 marks: some relevant information.

Staff turnover is the rate at which employees leave and must be replaced (employees who left ÷ average number of employees × 100). Rising voluntary turnover can indicate poor pay, management, job design or culture, and is costly because of recruitment, training and lost productivity. Exit interviews explain the causes.

Absenteeism is the rate of unplanned absence (days absent ÷ total scheduled days × 100). High or rising absenteeism can signal low morale, stress, poor health and safety, or excessive workloads, and it disrupts production and service.

Worker satisfaction is how content employees are with their work, pay, managers and conditions, measured with surveys, feedback sessions and exit interviews. Low satisfaction predicts higher turnover and absenteeism.

Evaluation. Each indicator must be benchmarked against past results, targets and similar businesses, because acceptable levels differ widely between industries. Improving indicators together suggest effective HRM; deteriorating indicators show where strategies must change.

Calculation (1 mark). $\frac{40}{250} \times 100 = 16$ per cent.

Further information (1 mark). A benchmark: the business's turnover in previous years, its target, or the average for its industry. Knowing how many departures were voluntary resignations would also help.

Scheduled days (1 mark). $20 \times 240 = 4800$ days.

Rate (1 mark). $\frac{192}{4800} \times 100 = 4$ per cent.

Voluntary (1 mark): employees choose to leave, for example resigning for a better-paid job; a rise suggests problems with pay, management or culture.

Involuntary (1 mark): the business ends employment, for example dismissal or redundancy; it reflects business decisions or performance management rather than employee dissatisfaction.

Calculation (1 mark). $\text{LTIFR} = \frac{6}{1\,500\,000} \times 1\,000\,000 = 4$ lost time injuries per million hours worked.

Interpretation (2 marks). The rate must be benchmarked against the business's past rates and the industry. If it is rising or above the industry, it suggests weaknesses in work health and safety training, supervision or safety culture, which bring human costs, workers compensation costs and possible legal penalties.

Cause (2 marks). HR strategies such as values-based recruitment, leadership training, recognition and fair performance management shape the shared values and behaviours of employees. A positive culture of trust and respect then drives engagement, productivity and retention.

Indicator (2 marks). Because culture is shaped by HRM, it can be measured to judge HRM: engagement and culture surveys, exit interviews and patterns in turnover, grievances and misconduct show whether the culture is healthy. A deteriorating culture signals that HR strategies need to change.

What benchmarking is (1 mark)

Comparing a business's indicator with a standard: its own past results, its targets, or other businesses in the industry.

Why it matters (2 marks)

A turnover rate has no meaning on its own. 20 per cent could be good in hospitality, where many employees are casual students, but poor in a professional services firm. Comparing over time shows whether HR strategies are improving retention.

Use (1 mark)

A business with turnover well above the industry average knows it is losing staff to competitors and can investigate causes through exit interviews.

Marks guide (Original, modelled on NESA criteria)

7-8 marks: interprets all indicators with benchmarks, makes a clear judgement about effectiveness, and recommends two well-justified strategies linked to the causes. 5-6 marks: interprets most indicators and recommends strategies with some justification. 3-4 marks: describes the data and some strategies. 1-2 marks: some relevant information.

Evaluation

Every indicator has deteriorated and is worse than the industry. Turnover of 26 per cent is well above the 15 per cent industry average and nearly double last year's, so the business is losing staff to competitors and incurring high recruitment and training costs. Rising absenteeism and a fall in satisfaction from 72 to 55 per cent point to low morale or overwork. New lost time injuries suggest safety standards have slipped, possibly because of fatigue or inexperienced replacement staff, and the jump in grievances signals growing conflict with management. HRM is currently ineffective.

Strategy 1: identify and address the causes

Conduct exit interviews and an anonymous engagement survey, then act on the main issues (workloads, rosters, pay relative to competitors or management behaviour). If pay is below market, review rewards, including non-monetary rewards such as flexibility and recognition.

Strategy 2: strengthen development and safety

Improve induction and training for the many new employees, including work health and safety training, and train supervisors in consultative leadership and fair grievance handling.

Monitoring

Set targets (for example turnover back to the industry average within 12 months) and review the indicators quarterly.