External business environments have made it difficult for HR to play a significant role in organizations. The external business environment has shaped the HR landscape. Organizations are competing for survival and there is a lot of competition. The market is constantly changing, so funding decisions and other techniques must be made. Unpredictability and uncertainty are two of the consequences of competition. Organizations can’t plan ahead. Economic trends and changes in HR play a role in these dramatic changes. Outsourcing is one example. Outsourcing has many benefits, including:
* HR can focus on other activities, such as reducing costs, accessing expertise that isn’t available in HR, greater flexibility and quicker responses. It can also lead to problems like:
* supplier increases their charges, makes quick and unwise decisions about what can outsource, and lowers employee morale. Dave Ulrich identified four key HR components that are essential to an organization’s effectiveness for employees. He is a Strategic Partner and Change Agent. He suggested to modify the HR Model’s structure. Ulrich explained that the key to success is not what you do. It’s how or more intelligently you do things. (1). He also mentioned the Three-Legged Stool or Business Partner models. (2) It consists, as Koganpage.com describes (2)
– Centres for excellence – These are specialized in providing high-level services and advice on recruitment. Strategic Business Partners (SBP) – These assist line managers in achieving their goals through strategic planning and execution. They often work in the business units and departments. – Shared Services Centres – These provide all routine services that are ‘transactional.’ These centres provide advice and support on employee issues, such as absenteeism and discipline. Ulrich claimed that this is essential in order for an organisation to survive. It allows HR to contribute more strategically and maximizes its contribution toward business performance. The principles of professional ethics are the foundation for every organisation.
The behaviour of employees in the company is a key indicator. It is crucial for an organization to
Encourage brand values like caring about their employees’ wellbeing. Respect.
It is important to respect the privacy of employees as well as to address their individual needs. They must be available for all inquiries.
To promote knowledge and experience that will help you choose the best option, you can be an ‘enabler’
solutions. Organisations are responsible for the quality of their services.
They should act in the customer’s best interests. It should evaluate the company’s performance.
Find out the company’s key strategies or plans. It is necessary to set objectives
These can be achieved. These include controlling costs and maximizing the use of resources.
Productive way. Retention and recruitment of staff. Training and development.
opportunities. Even flexible work hours can be introduced
Organisations changing business requirements. As Reilly & Williams (2006) (3) pointed out, the future status of the HR function depends on how it can learn, particularly from other functions like data, customer experiences, and branding. Although structures may change, the most important thing is the quality and innovation of the HR staff. Analyzing the Business Environment
Many tools are available to help you measure your performance and set goals. Business analysis models can be useful tools and techniques that help to understand the organisation and make strategic decisions about the business. Two models I will focus on are the Porters Five Forces and PESTLEE analysis. PESTLEE refers to six factors that can affect a business’s performance: legal, financial, legal, sociological and technological. The PESTLEE analysis is useful for strategic and business planning, major organisational changes, research, marketing planning, etc. PESTLEE analysis was developed to help businesses and organisations understand the effects of external factors.
* The long-term effects of business activities and performance
* Review any existing strategies
* Create a new product, direction or plan for the business
* Find solutions for problems
* Gain strategic advantages over your competitors
* Evaluate the risks associated in markets you are interested (2018)
Porters Five Forces, which was developed by Michael Porter of Harvard Business School, was used to assess the attractiveness and potential profitability of an industry.
It allows you to examine the competition strength by focusing on five factors.
Potential entrants – the threats and dangers of new entrants. How easy will they be able to get in the market.
Existing competitors – How many and how strong are they? What are the number of competitors? They are who? How does their product and service quality compare to ours. Companies can draw customers to areas where there is fierce competition by offering price reductions and marketing campaigns. You’re likely to make enormous healthy profits if there is very little competition.
Buyers can drive your prices down – it’s so easy for them. What are the orders of these buyers? What would it cost for them to switch to your products or services from a competitor? Do your customers have the power to dictate terms? Only a few customers have more power than others, but you can have more customers.
Suppliers – This is determined by the ease with which your suppliers can raise their prices. How many suppliers are you able to source? How unique are the products or services they offer? Would it be expensive to switch suppliers? You will find it easier to switch from a more expensive option if there are many options. You will pay more if there are fewer suppliers. This can have a negative impact on your profit.
Alternative products/services This is the possibility that your customers will find a better way to do what you do. Your position can be weakened and profitability threatened by a simple, cheap substitute.
This model allows you to create strategies that can keep up with influences. It can also be used to understand the forces at work that can impact profitability and adjust your strategies accordingly. This could allow you to take advantage of an opportunity or make improvements where needed, and prevent any future mistakes. Below, you can see the five Porter forces merged in this model: (Anon. (2018)
It is easy to assess a position by looking at how each force affects the organisation. This allows for strategic adjustments to be made in order to achieve long-term profits. Factors that impact an organisation’s HR function
All organisations need to monitor and adapt their HR strategies in line with external and internal environmental factors. These may include legislation, employees relations, and competition. External factors can have a negative impact on any organization. It is essential for any organisation to understand its market. I.e. HR should be focusing on recruitment, and going to job fairs in order to promote the company and attract the best staff. It is important to reward employees who are loyal. Another external factor that can affect an organisation is technology. Technology has made it possible for staff to communicate with suppliers, customers and colleagues via a single button. This technology allows organisations to adapt to changing market demands. As an example, the internet allows organizations to work in’realtime’. This has impacted skills, role structures, hours employees worked, and the overall role of HR. However, technology will make it easier to find jobs. As new technologies are introduced, HR departments might look to downsize or find ways of saving money. The number and nature of manual work has decreased but others remain. As a result, some employees find themselves working more hours and thus staying longer with the company. This can lead to increased paperwork for HR (evaluations, professional development, etc.). Carbon footprint is another external aspect. All organizations are compelled to pay attention to their environment, to minimize waste, and to recycle as much as possible. The increasing diversity of the workforce could also be a driver of internal change within an organization. These can be seen in employee expectations. Some people seek to maximize work/life balance and others seek meaning or purpose. The 9-5 Monday-Friday employee is experiencing a dramatic shift. Staff are now working less, doing shift work, and even sharing their jobs.
Employees will expect immediate responses to all problems. Managers might become impatient with slow or inept HR. For conflict prevention and sanctions to be avoided, the HR department should listen to employees. External factors can have a negative impact on an organisation’s HR department. The HR department must adhere to all compliance requirements. These standards could be used to hire, fire, compensate, train, and so on. Particularly, the processing of and storage of personal information under the GDPR policy. “In the end the future of the human resources function will depend on its capability and ability to learn from other functions (Reilly and Williams 2006). (Williams 2006) It is not possible to change the structure of a business, but the quality of its HR staff and their ability for innovation and improvement that are crucial.
Here are the main stages of strategy formulation and execution.
It is important for all organisations to be clear about their strategies and the actions they intend to take in order to meet their long-term goals. A HR strategy describes how an organisation uses HR to stay ahead of its competition. A good business plan is one that is likely and capable of succeeding. HR strategies are therefore more important in any organisation. The HR function serves as a strategic partner for the organization’s development and implementation. This could include recruitment, motivating and rewarding. The organisation’s vision, mission, and goals must be reflected in any strategies. HR is responsible for implementing strategic plans and is always evolving. Taylor and Woodhams (2016) (Taylor.n.d.), stated that business strategy can only be created by three approaches.
rational/classical
Emergent/logical incrementalism
symbolic/radical
The most used approach is known as the rational/classical and is primarily used by senior members. To help an organisation determine the best strategic direction, external and internal factors must be constantly considered. The final step is to identify the resources that will be required to realize the desired strategy. Mintzberg, 1990, clearly identified the fundamental premises of the classical strategy as (Anon. 2018,) the disciplined readiness and ability of managers adopt profit-maximisingstrategies through rational long-term plan’ (Whittington, 2001: 15). He did not believe that this approach could be used to guide best practice and analysis. Instead, he considered it too restrictive and simplified and too dependent on the military model and its culture of discipline. As it reacts to external and internal factors, an emergent strategy develops over time. An emergent strategic strategy is a sequence of actions, or behaviors, that becomes consistent over time. An organization’s actions and behavior over time create an emergent strategy. An emergent plan is one in which an organization is practicing what works. The symbolic/radical approach, which is more focused on innovation, is the final option. This approach is risky, long-lasting and difficult. A company does not compete for a share of the market. It creates its own market, taking over from all competition. This could allow an organization to control a market and create the rules that will make it a profit. There are many areas that can be explored and developed further. The possibilities for new innovations are often endless once you have invented a new idea. (Anon., 2018)
A company’s ability to attract and retain the best people is a key factor in its success. In order to control how staff behave, professional ethics must be observed. (team 2018, 2018) Porter’s Five Forces can be used to assess the competitiveness of an environment in a business and to identify potential strategies and profitability. This is important as it will allow you to adapt your business strategies to the changing forces in your company.
Porter acknowledged that organizations must watch their competition, but he encouraged them instead to examine the impact of the environment on their businesses. Porter identified five elements that form the competitive atmosphere and how they can influence profitability. These are the following:
Rivalry. This measures your competition’s strength and number. How many of your competitors are there? What are their names and how do they compare to yours in terms of quality?
Supplier Power. Suppliers can easily increase their prices. How many suppliers are you likely to have? What is your product/service uniqueness? How expensive would it cost to switch suppliers?
Buyer power. It’s easy for buyers and suppliers to drive down your price. How many buyers exist? What would it cost for them to switch to your services and products from a competitor?
Threat of substitution. How likely is it that your customers will find a better way to do what you do? An organisation’s profitability can be threatened by a simple and inexpensive substitute.
The threat of new entry People’s ability to access your market can impact the position of an organisation. Is it easy to gain a foothold within your market or industry? What is the cost of this venture? If you are unable to effectively compete in your market or have limited protection, it will be difficult for you to do so.
Business ethics can be defined by the Institute of Business Ethics to mean that business behavior must reflect ethical values, such as honesty, fairness and integrity. Respect and dignity are shown to colleagues Customers are treated fairly Are suppliers paid on-time? Is the business aware of its responsibilities to society? Business ethics, in simple terms, is how the business does business. It is doing the right and right thing because that is what the law requires. (CIPD, 2018)
“Ethics within business is about ‘doing what’s right’ because that’s the right thing. Without a comprehensive ethics program, an organisation can easily lose its reputation. HR is crucial in creating an ethical culture. Organizations must adopt a principles based approach to decision making if they are to promote and maintain ethical values. “Principles-based approaches are more effective for individuals in addressing ethical dilemmas.” (CIPD 2018, 2018).
Ethical issues that arise in big companies like Zara and Facebook attract a lot of media attention. However, small and medium-sized organizations can face the same ethical problems. Social media can spread negative rumours and cause reputational damage to any organisation. HR plays a vital role in maintaining an ethical workplace. They can help with staff recruitment, resolving ethical conflicts, and dealing with them. There are many challenges to ethical conflict. Witnesses should not be involved in order to endanger their relationships. Human Resources can ensure that organizations operate with integrity and fairness to minimize the risk of ethical conflicts. Employers that are not ethically healthy will lose staff motivation and their ability to attract good employees. HR should avoid creating an atmosphere of panic and keep staff safe from the negative reputational and emotional consequences. Accepting responsibility and recognizing consequences is the essence of accountability in HR. According to Lloyd (2004), accountability in HR is about accepting the responsibilities and consequences. Relationships built on trust are based on mutual respect, clear communication and accountability. You should have clear goals. Although HR accountability can be very visible and substantial, many HR professionals resist the responsibility. It takes planning and a new attitude. To maximize accountability, the relationship between staff and HR is crucial. Trust, respect, communication and problem solving skills, are key ingredients for accountability. As organizations grow in influence and importance, the need to increase the accountability of HRM functions is growing.
Human resources must be supportive, nurturing, teaching, rewarding and encouraging others in order to foster accountability.
