People in business
Cambridge IGCSE Business 0264 Chapter 2 revision notes covering the whole of syllabus topic 2, People in business, for examinations in 2027, 2028 and 2029. All content is examinable for every candidate: 0264 has no Core/Extended tier split, and all candidates take Paper 1 and Paper 2. The chapter follows the official order. Section 2.1, human resource management, covers recruiting and selecting employees (2.1.1) from the arising of a vacancy through job analysis, the job description and the person specification to the job advertisement, including online recruitment and employment agencies as ways of advertising, and the selection methods of curriculum vitae or resume, application forms, references, testing and assessment centres, and interviews, each judged by the evidence it actually produces. Internal recruitment is compared with external recruitment and a justified recommendation of which candidate to employ is worked in full against a person specification. Section 2.1.2 covers the employment contract - its main contents of duties and responsibilities, working hours, holiday entitlement and sick pay, and its benefits to employers and to employees - and then the four legal controls over employment issues, unfair dismissal, discrimination, health and safety and the legal minimum wage, with the effects of each analysed on both sides without inventing any country's law. Section 2.1.3 covers the importance of training to the business and to the employee and the advantages and disadvantages of induction, on-the-job and off-the-job training. Section 2.2, organisation and management, opens with the main functional areas of a business - operations, marketing, finance and human resources - then teaches the interpretation of simple organisational charts, keeping tall and flat levels of hierarchy, long and short chains of command and wide and narrow spans of control precisely apart. It covers flexible working through home working and flexible hours, and the advantages and disadvantages of part-time and full-time employees. The five functions of management are illustrated with business examples, and delegation is set out with its advantages and disadvantages and with the point that authority passes down while ultimate accountability does not. Autocratic, democratic and laissez-faire leadership are compared on speed, consultation, motivation, control and decision quality, with a justified recommendation for stated circumstances. Section 2.2.4 defines downsizing and redundancy, gives the reasons a workforce may need to be reduced including automation, reduced demand and the need to lower costs, and works a justified recommendation of which employees to make redundant on fair, job-relevant criteria. Section 2.2.5 covers what a trade union is and the benefits to employees of membership. Section 2.3 covers why communication is important, the advantages and disadvantages of meetings held face-to-face or virtually, email, text messages, social media, phone calls, letters, and posters and noticeboards, the distinction between internal and external communication, and the diagnosis and specific removal of communication barriers. Section 2.4 covers why people work, the four benefits of a well-motivated workforce - improved labour productivity, reduced absenteeism, lower labour turnover and greater willingness to accept change and new methods of working - the theories of Maslow, Taylor and Herzberg with a strength and a limitation of each, and the financial methods of time-based pay, piece-rate, salary, bonus, commission, profit sharing and fringe benefits set against the non-financial methods of job enrichment, job rotation, training, opportunities for promotion, praise and employee of the month. Worked case-study responses, decision clinics, an organisational-chart interpretation lab, a mistake clinic, retrieval practice, a mixed exam-style challenge and a spaced-review plan complete the chapter.Show moreShow less
Revision notes
Interactive notes with exam tips and worked examples.
Study path
Chapter overview
A summary of this Business chapter — open a section to read it. The full notes, worked examples and practice questions are in the study modules above.
What is People in business about?
People in business is the study of how a business turns employees into performance. Four questions run through the whole topic. How does a business get, keep and develop the right people — and on what terms (2.1)? How is authority arranged and exercised so that work is coordinated, and what happens when the workforce has to shrink (2.2)? How does information actually reach the person who needs it and get understood (2.3)? And what makes people willing to work effectively once they are there (2.4)? Every mark in this topic is earned by connecting a people decision to a business consequence: productivity, quality, cost, or an objective the business has stated.
Key ideas to remember
- PEOPLE → PERFORMANCE. Recruitment and training supply the capability, structure supplies the authority, communication supplies the understanding, motivation supplies the willingness. Remove any one of the four and effort stops becoming output.
- DESCRIPTION describes the JOB. SPECIFICATION specifies the PERSON. If a sentence starts "must have three years' experience", it is on the person specification. If it starts "supervise the evening shift", it is on the job description.
- Recruitment ATTRACTS a pool. Selection CHOOSES from it. Every selection method exists to produce evidence about one requirement on the person specification — if a method is not testing something on that list, it is not selection, it is impression.
- LEVELS go down the page — tall or flat. CHAIN goes down one line — long or short. SPAN goes across, one step below the manager — wide or narrow. Three words, three directions, three adjective pairs; get the direction right and you cannot confuse them.
- DOWNSIZING is the decision about the workforce. REDUNDANCY is what happens to the post. A business downsizes; a job is made redundant.
- NAME the barrier. STATE what it costs the business. REMOVE that specific barrier. Three moves — and "communicate better" does none of them, because it does not say what to change.
- Financial methods buy effort. Non-financial methods buy commitment. A business that needs output next week reaches for the first; a business that needs quality and retention next year needs the second.
What you need to be able to do
- I can put the stages of the recruitment process in order, from the vacancy arising to the job advertisement.
- I can distinguish a job description from a person specification.
- I can explain online recruitment and employment agencies as ways of advertising a vacancy, and choose between them for a stated post.
- I can name the selection methods — CV or resumé, application form, references, testing and assessment centres, interviews — and say what evidence each one actually produces.
- I can give advantages and disadvantages of internal and of external recruitment, and choose between them for a stated vacancy.
- I can recommend and justify which candidate to employ, using evidence from the person specification rather than personal preference.
- I can state the main contents of an employment contract — duties and responsibilities, working hours, holiday entitlement and sick pay.
- I can explain the benefits of an employment contract to the employer and to the employee.
- I can describe the four legal controls over employment issues and analyse the effects of each on employers and on employees.
- I can explain why training matters to the business and to the employee, and give advantages and disadvantages of induction, on-the-job and off-the-job training.
- I can name the main functional areas of a business and say what each is responsible for.
- I can interpret a simple organisational chart, and identify a span of control, a chain of command and the levels of hierarchy without confusing the three.
- I can describe a structure as tall or flat, a chain as long or short and a span as wide or narrow, and compare a tall structure with a flat one.
- I can explain home working and flexible hours, and give advantages and disadvantages of each.
- I can give advantages and disadvantages of part-time and of full-time employees.
- I can explain planning, organising, coordinating, commanding and controlling, with a business example of each.
- I can give advantages and disadvantages of delegation, and state what passes to the subordinate and what stays with the manager.
- I can state advantages and disadvantages of autocratic, democratic and laissez-faire leadership, and recommend and justify a style for stated circumstances.
- I can define downsizing and redundancy, and give reasons a business may need to reduce the size of its workforce, including the need to lower costs.
- I can recommend and justify which employees to make redundant, on fair, transparent, job-relevant criteria.
- I can say what a trade union is and explain the benefits to employees of being a member.
- I can explain why communication is important for a business, and name the parts of the communication process including feedback.
- I can name the methods of communication and give an advantage and a disadvantage of each.
- I can distinguish internal from external communication.
- I can recommend and justify a method using urgency, complexity, confidentiality, cost, audience size, the need for a record and the need for feedback.
- I can give examples of communication barriers and explain the reasons they arise.
- I can state the problems communication barriers cause, and give the remedy that removes a named barrier — never "communicate better".
- I can explain why people work.
- I can state the four benefits of a well-motivated workforce — improved labour productivity, reduced absenteeism, lower labour turnover and greater willingness to accept change and new methods of working — and give the mechanism for each.
- I can outline Maslow's hierarchy, Taylor's theory and Herzberg's theory, and give a strength and a limitation of applying each one.
- I can explain time-based pay, piece-rate, salary, bonus, commission, profit sharing and fringe benefits, and identify a risk attached to each.
- I can explain job enrichment, job rotation, training, opportunities for promotion, praise and employee of the month, and distinguish enrichment from rotation.
- I can recommend and justify a method of motivation for a stated business, worker type and objective.
Why People in business matters
Ferrand Logistics (a fictional learning case). Ferrand runs a regional parcel depot employing 49 people. The Depot Manager supervises four Shift Leaders; each Shift Leader supervises eleven loaders. Ferrand has just installed an automatic sorting line which does the work of eight loaders, and it intends to reduce the workforce accordingly. It also plans to move all shift instructions from a printed board in the loading bay to a messaging app on employees' own phones. Loaders are paid a time rate; the Shift Leaders are salaried and were all promoted from the loading floor. Labour turnover last year was 24%. Ferrand's objective is to cut operating cost per parcel by 10% while maintaining next-day delivery reliability.
Common mistakes to avoid
- "Higher pay always motivates." Fix The effect depends on whether pay was the unmet need in the first place, on whether it is seen as fair against colleagues, and on whether it is linked to anything the worker controls. Why Herzberg puts pay among the hygiene factors: fixing it removes dissatisfaction and stops there. If pay is already above the local rate, another rise buys a few weeks.
- "Motivated workers are more productive, so profit rises." Fix Motivation removes unwillingness. Whether output rises then depends on skills, equipment and systems. Why On an assembly line, output is set by the slowest station. A highly motivated worker at a fast station builds a queue, not extra finished units.
- "Herzberg said money does not motivate." Fix He classified money as a hygiene factor: too little causes dissatisfaction; more does not create lasting motivation. Why The stronger version is simply false, and stating it signals that the theory has been memorised rather than understood.
- "Job rotation and job enrichment are much the same thing." Fix Rotation moves a worker between tasks at the same level — the job gets wider. Enrichment adds responsibility and decision-making — the job gets deeper. Why They solve different problems. Rotation cures monotony; enrichment supplies achievement. Naming the wrong one for the case loses the application mark.
- "A wide span of control means many levels of hierarchy." Fix The opposite. Wide spans need fewer managers to cover the workforce, so they go with flatter structures. Why Span counts sideways, levels count downward. Confusing them turns a one-mark reading question into a wrong number.
- "Delegation removes the manager's responsibility." Fix Authority passes down. Ultimate accountability stays with the manager. Why It is the reason delegation requires clear instructions, competence and monitoring — the manager still carries the outcome.
- "Democratic leadership is the best style." Fix No style is universally best. Urgency, risk, workforce skill, leader capability, culture and the importance of the decision all bear on the choice. Why A fire evacuation run by consultation is not democratic leadership; it is a failure of leadership.
- "He was made redundant because his work was poor." Fix Redundancy happens because the job is no longer required. Ending employment because of someone's own conduct or capability is a different thing entirely, and it leaves the post in place to be refilled. Why 0264 requires you to define redundancy. Using the word for a performance problem contradicts that definition in the same sentence you are trying to earn the mark with.
- "Unions are bad for business." / "Unions are good for workers." Fix Both are one-sided. A union gives an employer a single structured channel for consultation and can also raise labour costs and slow change; a member gains bargaining power and pays a subscription and may lose pay in a dispute. Why The required knowledge is the benefits of membership to employees — but a Paper 2 part (b) asking whether a business should recognise a union cannot be judged from one side, and an unqualified "unions always raise wages" is simply false.
- "An employment contract just protects the employee." Fix It binds both sides. The employer gains enforceable duties, fewer disputes, the evidence a fair procedure depends on, and known hours and leave to build a rota from. Why 0264 asks specifically for the benefits of contracts to employers and to employees. An answer that gives only the employee column has answered half the question.
- "The problem is poor communication, so they should communicate better." Fix Name the barrier — jargon, noise, overload, long chain, status, no feedback — then give the remedy that removes that barrier. Why "Communicate better" does not say what to change, so it cannot be marked as a solution. It is the emptiest sentence you can write in this topic.
How People in business is examined
- All candidates take both papers, and both may assess content from anywhere in the syllabus. There is no tiered entry and no restricted paper: grades A* to G are available on the same two components to everyone. A calculator is permitted in the specimen papers.
- Read that structure row carefully. It describes the specimen papers, which is the best verified evidence available before the first live series in 2027. Use it to practise the shape of the demand. Do not treat it as a promise that every future paper will use identical wording or an identical spread of topics.
- The assessment objectives were reweighted for 0264, and the change matters more than it looks. Application is now worth almost as much as knowledge.
- What AO2 at 30% of every paper means for you. Nearly a third of the marks on both papers are for connecting the concept to this business. That is not the same as mentioning the business by name. Attaching "at Harrow Bay Hotel" to an otherwise generic sentence earns nothing; using the hotel's nine room attendants, its 36 employees or its seasonal occupancy to explain why the point matters here is what the application mark is for.
- Paper 1 is built from short answers and structured data responses, and each question comes with its own stimulus material, so definitions and distinctions tend to be tested one at a time and then applied. The 2/4/6/8 progression inside a question is a ladder: a 2-mark State or Identify, a 4-mark Explain, a 6-mark analysis, and an 8-mark part that expects a judgement. A People in business question of this shape might ask you to identify two selection methods, explain one benefit of an employment contract to the employee, analyse the effect of a wide span of control on communication, and then judge whether the business should delayer.
- Paper 2 gives you one business for the whole paper, and in 0264 every part (a) is an applied question. The people material usually arrives as a symptom rather than a topic: rising labour turnover, a supervisor with fourteen direct reports, a training budget being cut, a message that reached the shop floor two days late. Your job is to name the underlying concept, apply it to that business, and decide. The 12-mark part (b) is where the evaluation marks live and is usually a Consider task.
Syllabus reference and sources
Written against: Cambridge IGCSE Business (0264) syllabus for examinations in 2027, 2028 and 2029, Version 2 published March 2025 (Subject content, Topic 2: People in business).
Written by: Academiq Edu Instructor Panel
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