|Learning outcomes||Assessment criteria|
|1. Understand the key contemporary business issues and main external factors|
affecting different organisations and the impact on HR.
|1.1 Assess a range of different factors which impact on an organisation’s business and its HR function.|
|2. Understand how organisational and HR strategies and practices are shaped and developed.||2.1 Analyse the forces shaping the HR agenda.|
2.2 Compare different tools for analysing the business environment.
2.3 Explain the key stages in strategy formulation and implementation and the role of HR.
2.4 Examine HR’s contribution to business ethics and accountability
|3. Know how to identify and respond to changes in the business environment.||3.1 Evaluate business performance and the role of HR in business planning and the change management agenda.|
3.2 Assess and utilise different sources of business and contextual data for planning purposes
|Assessment activity||Assessment criteria|
|You have been asked by the CEO to compile a report on ‘The developing|
role of HR within present day business’. Your report should include;
|An analysis of internal forces which can shape the HR agenda, you could include for example; structure/model of the HR function, HR strategies, strategic objectives and stakeholder expectations.||2.1|
|An assessment and summary of a range of different external factors impacting on an organisation’s performance and explain how they affect the HR function.||1.1|
|A table comparing two different environmental analytical tools e.g. SWOT, PESTLE, Porter’s 5 Force’s, etc.||2.2|
|A summary of the key stages of strategy formulation and implementation. You should refer to the role of HR in each of the stages summarised. You should also highlight HR’s role in; i) Business Ethics and ii) Accountability. You should reference all key models and literature used.||2.3, 2.4|
|A table or chart illustrating a range of ways business performance is measured in the organisation for different purposes. You should also highlight with examples, the role of HR in; i) Business Planning and ii) Change Management.||3.1|
|An assessment of how different sources of business/internal and contextual/external data should be considered and used when planning e.g. internal information within the organisation including HR metrics, industry information e.g. trends in HR, competitive information, government information.||3.2|
The Human resource department is crucial for every organization operating within the society. It is in this department that new ideas are developed to boost efficient running of the organization. The human resource department is tasked with the responsibility of overseeing operations conducted within the organization. Most of the operations carried out in an organization have to be supervised or controlled thus the need to have the human resource department to oversee these functions.
The main operation that the department is responsible for overseeing and controlling includes those that focus with the relationship between employers and employees. Every organization is guided by labor laws hence it’s the department that ensures laws are adhered to the latter. The HR department consults with the executive arm of the organization when paying compensations, recruitment and training of all staffs. The department has a mission to create a powerful workforce which according to Armstrong (2006), explains that created workforce of any organization should be able to meet set goals.
In the contemporary business world we are today there is no doubt that the functions of HR are evolving. There is need for every HR department to be aware and updated with the current changes in trends relating to the department. Failure to which, an organization is likely to be disadvantaged by its competitors. The HR considered new parameters (Farndale etal, 2010) since most of the business leaders appreciate that the more they support their own human resources, commitment and productivity the more leverage they get in return. Since late 1980s, organizational managers took control of their staff- related aspects by developing HR strategies which defined performance framework. This influenced organizations positively by reducing influence and powers by unions since majority of employees opted to seek in- house advice. The strategy has shown positive impact in shaping the HR agenda such as structure of the HR function, strategic objectives, HR strategies and stakeholders expectation.
Structure of the HR Function. According to Polyhart and Maliterno (2011), the HR role has been changing frequently due to the global economic growth since technologies have been rapidly interconnected and transparent. HR practices has since then been at a crossroad. Over three decades the HR department has indeed passed through frequent transformations from its initial personal department to one that adopts HR as a service center.
HR strategies. These are the general plans adopted by organizations to enhance efficient implementation of certain HR functional areas. HR strategies help in guiding the personnel decisions taken into account by the organization. As noted by Cipid.co.uk. (2016), HR strategies should identify the overall plan that brings about the implementation of particular HR functional areas. As compared to the traditional practice where the HR strategies focused only on leadership, the current HR strategies take into account issues of culture, organization and other systems.
Strategic Objectives. A plan is what differentiates a useful HR function and a great one. A high- quality plan tends to deliver best results thus making the HR department stronger. Any ordinary HR department is capable of performing its tasks, but a highly strategic HR department incorporates business strategies and innovative practices that boost productivity. A highly strategic HR agenda is capable of enhancing sustainable competitive advantage by improving the organization. Human resource managers should design strategic objectives that guide the organization in driving critical decisions and predicting positive trends of the organization. Therefore, developing a successful HR agenda depends on being strategic and developing an objective plan that fits best with the organizations corporate culture. The success of HR in the organization will depend on the quality of the strategic objectives defined by the HR department.
Stakeholders Expectation. Internal stakeholders are individuals or groups directly and financially involved in the general operational process of the organization. Therefore, employees and managers are considered to be internal stakeholders who feel the impact of the strategies established by the HR. Since Integrated HR solutions account for 87% of HR’s impact on management and 91% on employees, shareholders expect the HR department to provide practices that are fully integrated and reinforce each other. Both the managers and employees expect the HR department to integrate HR practices with the business strategy vertically, thus providing seamless solutions to the organization.
Competition. Competition is one of the major external forces that have a huge impact on almost all the agenda of the HR in every particular organization. The existence of other organizations bring about the existence of competition especially firms that are grouped in the same industry. As competition increase, specific industries force some firms to embrace and adopt new business strategies. HR departmental managers are forced to ‘outline new practices in order to deal with arising competition’ (Armstrong 2006, p. 53). Competition between the two firms will affect the activities in the HR department. As a result, management of organizations is forced to attend several job fairs and internal meetings to design strategies that will promote the organization. As competition gets tough, the HR department may have to come up with advanced policies and programs that will help retain important and skilled staff from being lured to the competitors. This strategy is very useful in ensuring organizations become successful while the targeted organization becomes more competitive by hiring competent employees for them to succeed. To improve performance the organization is able to introduce new business strategies that are aligned with the targeted industry.
Technological advancement. Technological advancement is an external factor that affects the operations and the agenda set by the HR department especially in this digital age of technology. Urgent need by organizations to update to the current technology for efficiency in operations does affect the patterns through which people are hired. Also, technology affects how trainings and evaluation sessions among staffs are conducted in the organizations. For instance, advancement in new marketing channels prompt the HR department to initiate training sessions for staff particularly in that department involved. In cases where the organization has procured new technology, then the HR department will require to recruit new staff in the (Information communication Department [ICT]) who can manage the equipment’s.
Government and political forces. According to Boxall and Purcell (2011), the government plays a major role in influencing the processes of recruitment, hiring, training, termination and compensation by organizations to its employees. The government on the other hand always releases new employment compliances standards that affect the operations of the HR department in the organizations. For instance, in the UK the government constantly pressures the HR departments to always operate within the set law. Misstep by the organization could lead to sanctions and lawsuits filed by an employee, clients or vendors in case of failure to adhere to the government laws which will affect the organizations performance negatively. On the other hand, political environment of a nation can affect hiring, training and evaluation of a company. The HR department is forced to offer training to its workers during or after political election period for staffs to fully understand and respect political views of their co- workers. In a situation where the HR department fails to offer such training and employees become uncooperative, then the overall performance of the organization is likely to be affected.
Demographics. The issue of demographics also plays a crucial role in reshaping the HR agenda of any particular organization. In reference to Sission (2001), every HR department should always consider the number of potential workers in any given market. The performance output of the organization will depend on the amount of staff acquired for each department, thus ensuring maximum efficiency is achieved. The HR should always monitor the number of employees who are eligible for retirement to ensure potential replacements. Similarly, the HR should ensure other staff members are trained enough to gain the knowledge in case of departure of a worker especially during retirement. The HR should be highly trained to ensure he or she is ready to face any arising challenge that comes in the way. The HR should be adaptable and ready to combat any force that arises affecting the organization. A good HR manager should be cooperative and always work hand-in-hand with the heads of other departments to efficiently share any forces that could hinder effective operation of the organization (Huselid 1995, P635-672).
SWOT Analysis. SWOT analysis is a technique for analyzing the strengths, weaknesses; opportunities and threats (SWOT) of an organization. SWOT analysis points out a guiding framework that assists planners and researchers in identifying or prioritizing business goals while also in identifying strategies of achieving these goals (Ommani 2011, P.9948). It is considered a very important tool for any organization whose aim is to succeed in its operations. Using SWOT analysis, the HR can assess how to take advantage of strengths, minimize effects of weaknesses, make the most of the available minimal opportunities and reduce any effects brought about by threats in the organization.
PESTLE analysis. PESTLE analysis looks into the political, environmental, social, technological, legal and environmental factors that are likely to impact on the normal functioning of an organization. According to Professional Academy (2018), PESTLE analysis refers to a tool that marketers use to analyze and monitor macro- environment or the external marketing environment factors with direct impact on the organization. The outcome of this analysis is what the SWOT analysis depends on to identify threats and weaknesses of an organization. It is the best analysis tool for the HR to use when the organization is on the verge of expanding operations for instance when opening a new branch in a foreign or different geographical region.
The HR should be equipped with sufficient knowledge in PESTLE analysis to be able to make use of the opportunity arising from external forces to adjust the organization plans and still be able to meet future plans.
Porter’s Five Forces. Porter’s five forces is a tool that any organization can use to improve their competitive position in the market by examining where power is situated in a competitive situation. The model was developed by a Harvard Business School Professor Michael E. Porter in his book “Competitive Strategy”. According to Porter (2008), P.9 strategy is an incentive used by organizations to perform better than its competitors and still be able to manage the difference. Porter discussed five forces in this strategy which includes; the threat of substitute products, bargaining power of suppliers, bargaining power of buyers, threat caused by potential entrants by new entrants and lastly competition between existing industries.
Strategy formulation is the processes by which an organization opts for the best course of actions that will enable it realize set organizational goals and objectives. The role of HR in the organization is thus to ensure HR’s strategies are aligned with the ideologies of the company. The process basically involves the following main stages;
Setting Organizations objectives. In this stage the organizations strategy is to set long term objectives. This includes fixing of the objectives and the mediums to be used to realize these set objectives. Realization of these objectives will be determined by the HR role in recruiting inspired employees with high efficiency and potential to grow.
Evaluating the Organizational Environment. This next step involves extensive evaluation of the general economic and industrial environment in which the organization operates. The HR department is involved in reviewing the competitive position of the organization to produce viable strategies that ensure the organization survives in the prevailing environment.
Setting Quantitative Targets. The HR department of the organization comes up with quantitative targets to be achieved by the organizational objectives. The HR ensures that the set targets are achievable within the prescribed period of time.
Performance analysis. This stage aims at discovering and analyzing the gap created between planned or desired performance of the organization. A critical performance evaluation of the organization, past, present and future conditions of the organizations are studied to identify any degree of gap that exists. The HR department ensures that the recruited employees possess the skills needed to enable the organization perform as planned.
Choice of Strategy. Is the final stage where the best course of action is selected after all the consideration such as goals, strengths, limitations and external opportunities. The HR department in consultation with other managerial departments settles on the best choice strategy for the organization well-being.
Strategy Implementation involves putting into action the strategies developed by the organization to facilitate the realization of set goals and objectives. The stages involved in implementation of organizational strategies include;
Executing Organization objectives. Is a level that involves all the means that have been set by the organization to enable it act on the strategic plans. Employees of the organization are responsible for executing the set strategies thus the HR role in recruiting qualified employees will determine if the strategies will be implemented efficiently.
Resource Disbursement. Essential activities that require resources often are disbursed abundantly in this stage to ensure continuous operation. The HR is involved in monitoring department that needs extra personnel to boost operation since it’s the department responsibility of recruiting new workers.
Creating strategy. It is in this stage that HR department comes up with encouraging policies that boost smooth running of the organization. Since organizations are guided by policies the HR department and other managerial departments are directly involved in creating the best strategies to be adopted.
Employing policies. The HR department ensures that policies and programs are implemented to ensure the organization has a constant improvement in its activities.
Business Ethics. Business ethics are codes of moral conduct that every organization has either written or unwritten which govern the actions and decisions of the company. As stated by Murphy et al. ‘s (2017),ethical business issues facing organizations currently include; employee being asked to gain and share sensitive information by personal contacts, undermining of the organizations position and credibility, sexual harassment or peer pressure in personal selling. Collings and Mellahi (2009) equally observed that globalization has a critical role to play in shaping the HR agenda today. The HR manager and its department thus play a crucial role in maintaining an ethical conduct within the organization by:
Accountability. A successful organization has set cultures that prioritize and inspires accountability among its staff. Therefore, professional HR managers cannot force accountability but all they can do is enhance favorable environment for its employees to be accountable. A healthy and flourishing work culture of an organization highly depends on accountability in the workplace.
The HR professionals are responsible for increasing accountability in the organization since they are involved with every decision affecting the staff. For instance, the HR is involved in the recruitment of new staff for any department and handling every departure of workers leaving the organization. As a result the HR is responsible for movement of anyone in and out of the organization. The HR makes decision that will make the people given access to move within the organization to honor their human rights and be accountable to their actions.
Measuring business performance in the organization
An organization performance model considers different perspectives to provide full view of an organization performance.
Balanced Scorecard [BSC] (Kaplan and Norton 1996, 2001)
Is a model designed to find balance between financial and non-financial performance indicators, between internal and external shareholders’ interests and between showcasing past performance to predict future performances. This model is meant to encourage organizations to design strategic long-term objectives and link them to short-term operational targets.
An increase in performance related to growth, quality of products and services are affected positively as a result improving customer performance. Hence, financial and customer perspective indicators are assumed to measure performance outcome, wear as internal business process and growth are considered to be performance drivers (Kaplan and Norton 2004).
Business performance measurement encompasses a series of steps as highlighted in the below diagram
A Business plan is essential for ever organization as it guides how an organization operates and develops over a certain period of time. It should be reviewed on a regular basis bearing in mind the organization goals and objectives. The HR is thus involved in development of the organization business plan. Key elements in business planning include;
Resource Planning. Resource planning of an organization requires people to carry out activities as outlined in the business goals. Therefore, having the right skilled staff to perform the roles is important and the HR department is responsible for recruitment of new employees. Since employees in an organization can at any time resigns, retire or leave on maternity leave. Such cases will impact on the number of workers and roles assigned, thus the need for the HR to recruit. Therefore, the HR is required to work with the management to define the role profile, compose specifications needed for a new recruit, dictate when and how to advertise and lastly, to structure interviews so as to select the best person.
Organizational Design and Development. Studies dated back in 1930s reveal that organizational structures influence the behavior and motivation of a workforce. The HR is involved in the design of structures and processes that increase operational efficiency, lower risk and improve problem solving. It is the HR department that ensures the creation of new systems and processes in specific areas have positive impact on other related areas of the organization. Lastly, it is the HR whose responsibility is to put forward staff based strategies that offer consistency of the alterations throughout the organization.
Training and Development. The HR department is tasked with developing strategic approaches to training and development that guarantee their employees are equipped with the needed quality skills. The HR is a key influencer in the organization through making suggestions and feedbacks from both employees and the management concerning input and execution of strategies.
Change is dynamic thus change management in an organization is the ability of employees in their own capacity to adapt to change. The HR department is responsible for recruiting, training and monitoring employees performance thus since the above tend to change often then the HR has a key role to play in case of change in management.
It is the responsibility of the HR department to motivate employees in the organization to undertake and accept any change in the program. During recruitment HR recruits people who have the potential of bringing different perspectives and easily adapt to changes. The HR department recruits people who are agent changers those that can easily motivate other employees to participate in change initiatives thus helping in driving change in the organization.
Different sources of business internal and external data used in planning
Internal data is information generated from operations, maintenance, staff personnel and financials of an organization. The data assists in running the organization and optimizing operations. On the other hand external data is data obtained from the market by use of statistical surveys, research and feedback from clients and competitors. It assists in understanding customer base and competitive landscape.
Sales. Sales data is an important source of internal data for an organization to use during planning. Using the sales data an organization is able to break down the numbers and analyze each distribution channel, price, geographical area and customer type to determine which are more efficient. For instance, an organization is able to break the sales data into geographical area to determine which areas the campaign is successful and which area is not. Using HR metrics the organization can review the salespersons data to ascertain if it is due to lack of training of employees that result to low sales in a particular region. An organization can rely on this internal data to gain competitive advantage against its competitors. Areas with low sales the organization may opt to leave the market and direct resource to other regions with potential.
Finance. Financial department in the organization is tasked by providing internal data from cash flow reports, production reports and from the budget analysis. These reports assist the organization in knowing the cash flow going in and out of the company and at what time and purpose. Using HR metric the management is able to use this data when planning as the management is able to monitor the best time to order supplies per unit cost, thus buying when the cost is low to maximize profits. To gain competitive advantage in terms of setting low price of commodity, financial data is crucial for an organization in cutting down costs by ordering supplies when costs are low.
Marketing. Marketing is a source of internal data for organizations gathered mostly from statistics obtained from websites, promotional codes and phone records. Using these reports the organization can use HR metrics to track and monitor the demand of the company’s product and services depending on how frequent they are inquired on their digital platforms. If clients prefer using these technological means then the organization when planning opts to allocate more resources in marketing the product using such options. It is able to drive sales up thus gaining competitive advantage from other industries relying on traditional marketing methods.
The success of an organization depends on the management by the HR department to ensure programs and targets are achieved. An organization strategy designed by the HR will determine the success or stagnation of the company agenda and programs. Therefore, the HR should ensure that adequate and relevant training for all its employees to ensure goals and objectives are achieved. The HR is also tasked in keeping a good track record on globalization and the effects it could have on the organization. The HR should monitor such effects and update the organization. The HR shall not only engage in the selection, recruitment, training of the workforce but also should assist in monitoring employee’s performance to ensure maximum efficiency by the employees.
Every organization no matter how big or small has a HR department thus there is always room for improvement. The following are suggestions regarding the developing role of HR in the current business environment in organizations; Performance of the organization is crucial thus the HR should ensure to meet regularly with employees to monitor the performance and suggests areas of improvements.
The HR should clearly define the expectations expected by employees to ensure that staffs know what is expected of them on a regular basis. Defining development goal by the HR to motivate its employees to understand what they are working for to ensure they put effort in every task they do to meet the objectives. The HR department is expected to carry out routine absenteeism checks to find out if any employees of the organization have grievances that may limit their work performance.
Lastly, the HR department should engage in constant review of its policy and procedures to ensure they meet the current standards of law.
“External Factors That Affect Human Resource Management.” Workology, 18 July 2013, <https://workology.com/4-external-factors-that-affect-human-resource-management/>.Keys to Internal & External Stakeholder Management for HR – Inside HR. <https://www.insidehr.com.au/3-keys-to-successful-stakeholder-management-for-hr>. Accessed 24 Sept. 2020.
“Human Resources Models Every HR Practitioner Should Know.” AIHR Digital, 22 Oct. 2018, <https://www.digitalhrtech.com/human-resources-models/>.
“HR Metrics Examples: The Basis of Data-Driven Decision Making in HR.” AIHR Analytics, 10 June 2016, <https://www.analyticsinhr.com/blog/14-hr-metrics-examples/.>
Vickers, Mark R. “Business Ethics and the HR Role: Past, Present, and Future.” Human Resource Planning, vol. 28, no. 1, Human Resource Planning Society, Mar. 2005, p. 26.
“Business Issues and the Contexts of Human Resources.” UKDiss.Com, <https://ukdiss.com/examples/business-issues-human-resources.php>. Accessed 24 Sept. 2020.
Van Looy, Amy, and Aygun Shafagatova. “Business Process Performance Measurement: A Structured Literature Review of Indicators, Measures and Metrics.” SpringerPlus, vol. 5, no. 1, Oct. 2016, p. 1797.
Cooper, Jessica. “Changing HR Operating Models.” Strategic HR Review, vol. 14, no. 3, Emerald Group Publishing Limited, Jan. 2015, pp. 105–06. CIPD HR Operating Models ~ Strategic Human Capital Management (HCM) Blog. <http://strategic-hcm.blogspot.com/2015/03/cipd-hr-operating-models.html>. Accessed 24 Sept. 2020.
“Ethics in HR – The Role of Accountability.” Changeboard,<https://www.changeboard.com/article-details/16969/ethics-in-hr-the-role-of-accountability/>. Accessed 24 Sept. 2020.
External & Internal Environmental Factors Influencing HR Activities | Small Business – Chron.Com. <https://smallbusiness.chron.com/external-internal-environmental-factors-influencing-hr-activities-34745.html>. Accessed 24 Sept. 2020.
“Forces Shaping the HR Agenda.” Peopleworks, 2 May 2019, <https://www.peopleworks.in/human-resource/forces-shaping-the-hr-agenda/>.
HR Role in Strategic Planning – HRM Handbook.< https://hrmhandbook.com/hrm/hr-roles-and-responsibilities/hr-role-strategic-planning/>. Accessed 24 Sept. 2020.
“HR’s Role in Strategy Formulation and Interpretation.” Peopleworks, 2 May 2019, <https://www.peopleworks.in/human-resource/hrs-role-in-strategy-formulation-and-interpretation/>.
“PESTLE Analysis | Factsheets.” CIPD, <https://www.cipd.co.uk/knowledge/strategy/organisational-development/pestle-analysis-factsheet>. Accessed 24 Sept. 2020.
Hall, Mary. “Porter’s 5 Forces vs. PESTLE Analysis: What’s the Difference?” Investopedia, <https://www.investopedia.com/ask/answers/041015/whats-difference-between-porters-5-forces-and-pestle-analysis.asp>. Accessed 24 Sept. 2020.
Steps in Strategy Formulation Process. <https://www.managementstudyguide.com/strategy-formulation-process.htm.>. Accessed 24 Sept. 2020.
Strategic Planning Process and the Role of Hr. <https://www.slideshare.net/williamwachira/strategic-planning-process-and-the-role-of-hr>. Accessed 24 Sept. 2020.
The Importance of Accountability.< https://www.hrdconnect.com/2018/08/28/the-importance-of-accountability/>. Accessed 24 Sept. 2020.
The Role of HR in Strategic Planning. <https://www.management-issues.com/opinion/1137/the-role-of-hr-in-strategic-planning/>. Accessed 24 Sept. 2020.
“What Is HR’s Role in Managing Change?” SHRM, 1 Sept. 2016,< https://www.shrm.org/hr-today/trends-and-forecasting/special-reports-and-expert-views/pages/deb-cohen.aspx>.
“What Is PESTLE Analysis? An Important Business Analysis Tool.” PESTLE Analysis, <https://pestleanalysis.com/what-is-pestle-analysis/>. Accessed 24 Sept. 2020.
The Role of Human Resources Management in an Organisation – The WritePass Journal : The WritePass Journal.< https://writepass.com/journal/2012/11/the-role-of-human-resources-management-in-an-organisation/>. Accessed 24 Sept. 2020.
Vickers, Mark R. “Business ethics and the HR role: past, present, and future.” Human Resource Planning, vol. 28, no. 1, Mar. 2005, p. 26+. Gale Academic OneFile, Accessed 22 Sept. 2020.
“Internal and External Factors Affecting Human Resources.” Bizfluent,
<https://bizfluent.com/info-8612477-internal-factors-affecting-human-resources.html>. Accessed 24 Sept. 2020.