Puli Insurance (PI) PI only sells its own car and home insurance. It was set up as a private limited company in 1988 by Kwami Puli to sell insurance to customers in country D. Kwami was Managing Director (MD) until 2019 when he retired. His son, Idir, became the new MD. Kwami remains the largest shareholder of this family business. Timeline of PI 2020 Idir believes that PI has poor employee performance. He dismisses the Human Resource (HR) manager and adds the role to his own duties. Idir commissions an independent business analyst to report on the HR issues in the company [Appendix 1]. 2021 Idir reviews the existing organisational structure [Appendix 2] and makes recommendations to the Board of Directors [Appendix 3], which are quickly adopted. 2022 All PI managers are sent on a five day off-the-job training course to encourage intrapreneurship. Trade union membership (as proportion of total workforce) increases to 60%. 2023 Idir implements a 'paperless office' policy which orders all employees to use electronic communication whenever possible. All employees are issued with a smartphone for business use only. 2024 Idir is interviewed by a trade magazine about his first five years as MD of PI [Appendix 4]. Developing a new business strategy Idir wants to target pet owners to sell them pet insurance (to pay for medical treatment for domesticated animals). The market for pet insurance in country D is growing rapidly and is set to reach $5bn by 2026. The market segment is dominated by two large competitors and it will require significant investment to enter successfully. Idir believes that PI could gain economies of scale by selling to this market. Idir will need advice on what accounting data he should use to help him develop this new business strategy. Appendix 1 Extract from a report outlining the HR issues in PI in 2020 | PI | Industry average in country D | | --- | --- | | Labour turnover | 2% | 15% | | Absenteeism | 12% | 5% | | Lateness | 27% | 10% | | Management average emotional quotient (EQ) score | 120 | 80 | [Appendix 2 Organisational structure of PI in 2021] [Appendix 3 Summary of Idir's recommendations to the Board of Directors in 2021] [Appendix 4 Extract from a 2024 interview in a trade magazine]

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2024). The mark or mark type is shown in brackets.

1. [max 1 mark] Knowledge can be awarded for any relevant business knowledge about employee performance and improving employee performance, including:
2. The purpose and roles of HRM
3. Workforce planning
4. Recruitment and selection
5. Redundancy and dismissal
6. Morale and welfare
7. Training and development
8. Management and workforce relations
9. Motivation
10. Management
11. Organisational structure
12. Delegation and accountability
13. Control, authority and trust
14. Centralisation and decentralisation
15. Business communication
16. Leadership
17. HRM strategy, including: Hard and soft HRM
18. Flexible working contracts
19. Management by objectives (MBO)
20. Role of IT and AI in HRM
21. [max 2 marks] Award DEV for any explanation of relevant business knowledge.
22. Motivation is the desire to do something;
23. Motivation is the desire to do something for example a person can be motivated to work harder by financial incentives;
24. Motivation is the desire to do something for example a person can be motivated to work harder by financial incentives. A worker can also be motivated by non-financial incentives, like belonging
25. [max 2 marks] Application can be awarded for applying knowledge, analysis or evaluation of employee performance, to PI between 2020 and 2024.
26. Idir's strategy between 2020 and 2024, including:
27. Idir becomes HR manager – dismissing the previous manager.
28. Idir commissions an independent business analyst who reports: Low labour turnover (2% compared with 15%), High absenteeism (12% compared with 5%), High lateness (27% compared with 10%), High EQ score (120 compared with 80), Low trade union membership (4% compared with 25%).
29. 2021 organisational structure [Appendix 2].
30. 2021 recommendations to the Board [Appendix 3].
31. Delayer the organisation structure by combining the car and home insurance sections of the business, making the car and home insurance managers redundant.
32. Reduce the number of functional managers and employees through involuntary redundancy.
33. Decentralise decision-making to the remaining functional managers.
34. Introduce financial penalties for lateness and financial incentives for 100% attendance.
35. Increase use of information technology (IT), especially in sales.
36. Five day off-the-job training course to encourage intrapreneurship.
37. In 2022, 60% trade union membership.
38. Paperless office policy in 2023 and smartphone issued to all employees.
39. 2024 interview in trade magazine:
40. Idir believes in hard HRM.
41. Increasing labour turnover.
42. Cost of sales is low.
43. Highest gross profit margin in industry.
44. Doubled sales since 2020.
45. Half number of employees.
46. Almost no lateness or absenteeism.
47. Analysis is likely to be based on how improving employee performance may have affected PI's decision making between 2019 and 2024.
48. Analysis is likely to be based on how Idir's strategy may have affected employee performance 2020 and 2024, including:
49. Dismissed HR manager which may have lost expertise and experience of the employees at PI – leading to a worsening of employer-employee relations and industrial action.
50. Idir may not have the qualifications and expertise to manage HR as well as his duties as MD, leading to poor HRM – may increase labour turnover for PI – increase costs.
51. Delayering the organisation structure:
52. Increased costs of redundancy – lower profit – loss of expertise – increased costs
53. Car and home insurance may require different skills and abilities, meaning that employees are not being utilised in the most effective place – leading to increased costs – less profit.
54. Use of involuntary redundancy – may lead to demotivated employees who do not work as fast – increased costs – reduced efficiency.
55. Lack of supervision through the decision to reduce the number of functional managers – lower productivity.
56. Decentralisation may put more pressure on Managers, despite some being made redundant – reduce efficiency – higher average costs.
57. Penalties for lateness may cause employee dissatisfaction leading to increased employee turnover – increased recruitment/training costs.
58. Financial incentives for 100% attendance may discourage absenteeism – increasing productivity – increased sales – increased profit.
59. Use of IT may speed up sales process, increasing sales revenue – increasing profit – however may irritate customers, reducing sales – decreasing profit.
60. Idir's HR ideas are quickly adopted – may not be the best strategy, but Directors may feel pressured to agree, especially after redundancies – introduce strategies that may harm PI and lead to lower profit.
61. All PI managers sent on training to encourage intrapreneurship – increased problem solving leading to higher sales/lower costs/new product development – increased sales – higher profit.
62. Increased trade union membership may lead to more industrial action/collective bargaining increasing costs – reducing profit.
63. Paperless office introduced leading to lower costs – may also require training for all employees – increased costs.
64. All employees issued smartphone which increases PI's costs – may increase effective communication – more efficient.
65. Hard HRM leading to dissatisfied employees – higher labour turnover
66. Clear communication of instructions and supervision may lead to a more efficient workforce – lower costs.
67. Labour turnover has risen – increased costs – lower profit.
68. Cost of sales is low/high gross profit margin – increased profit for shareholders.
69. Sales increased with less employees leads to increased efficiency – higher profit.
70. Best training in industry may lead to increased applications – lower cost of recruitment – better applications/employees.
71. Evaluation will largely depend on the points raised in the analysis.
72. A judgement over the impact of Idir's strategy on PI's employee performance between 2020 and 2024.
73. Discussion over the level of impact on the PI's employees and what that impact may depend upon; external influences, overall objective of PI, the feelings/attitudes of the employees and management of PI, how established the corporate culture is within PI, the level of animosity over the involuntary redundancies, etc.
74. The extent to which the decision making clashes with or works within the objectives of PI.
75. Other external influences on PI's decision making other than the corporate culture (e.g. the state of the economy; economic growth) social factors (e.g. increasing remote working), technological factors (e.g. increased use of technological communication in 2020/2021 due to the pandemic).
76. Accept all valid responses.
77. Exemplar L1: Idir's strategy for improving employee performance between 2020 and 2024 was good.
78. Exemplar L2: Idir's strategy for improving employee performance between 2020 and 2024 was good because he eliminated most of the absenteeism which was much higher than the industry average and must have increased PI's costs significantly.
79. Exemplar L3: Idir's strategy for improving employee performance between 2020 and 2024 was good because he eliminated most of the lateness which was 7% higher than the industry average and must have increased PI's costs significantly.
80. Exemplar L1: The success of Idir's HR strategy depends on many factors.
81. Exemplar L2: The success of Idir's HR strategy depends on whether the external influences in country D are likely to change. For example, if the unemployment rate in country D increases, he may find hard HRM makes recruitment difficult, if no-one wants to work at PI.
82. Exemplar L3: The success of Idir's HR strategy depends on whether the external influences in country D are likely to change. For example, if the unemployment rate in country D increases, he may find hard HRM makes recruitment difficult, especially in the Pet market which is dominated by two large competitors who may have better HRM.