Business Issues and the Context of Human Resources

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Introduction

The role of human resource (HR) management in the work of modern business organisations is not limited solely to monitoring the productivity of employees and their success in performing immediate tasks. Creating the conditions to assist subordinates in achieving their maximum productivity and desire to realise professional potential is of great importance. In my organisation specialising in oil sales, the functions of HR specialists are numerous and include close interaction with the personnel. Hiring competent employees, engaging team motivation strategies and other tasks are implemented within the framework of complex HR policies. To respond to global changes and new trends quickly, it is essential for employees to adapt to specific working conditions. Therefore, the role of HR specialists is significant and forms the overall image of the organisation both in the domestic and international arenas. The contribution of these employees to the achievement of recognition is high, and utilising modern strategies and tools in analysing the business environment helps obtain objective information about my company’s work.

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A Range of Impacts on the Organisation’s Business and Its HR Function

In order to determine how effective and successful my business is, it is essential to consider specific factors that shape its performance in the market and affect HR activities. According to Naghshbandi, Chouhan and Saremi (2017), the financial aspect is one of the main drivers influencing any company’s policy since the possibility of allocating budget funds for introducing changes and implementation programmes is costly. At the same time, other criteria are to be taken into account, for instance, social and political impacts. These influences also determine the specifics of work and, in particular, HR policies because if there are constraints and restrictions, the principles of building the necessary control programmes for the activities of subordinates are complicated. In Figure 1, Chitescu and Lixandru (2016) present the challenges that many business leaders face when implementing potentially effective change projects.

Problems of management implementation 
Figure 1: Problems of management implementation 

In order to assess the impact on the business of my company and draw conclusions regarding its success, specific influences will be considered in the context of their role in the formation of HR strategies. As these factors, economic, socio-cultural and political aspects will be considered. The analysis in this format can help identify the most significant drivers that govern the nature of HR activities and managerial work in general.

Economic Impacts

Based on the significance of all the factors, economic impacts are the strongest in relation to the business development of my enterprise and the implementation of relevant HR policies. As Chitescu and Lixandru (2016) argue, any changes in the distribution of budgetary funds affect productivity, and, for instance, in case of reduced funding, the likelihood of successful market activity also decreases. This is due to the fact that any staff training is costly, and in order to implement HR projects and optimise the operating mode, strategic steps are usually associated with an increase in capital investments. According to the official data, the indicator of GDP per capita in Saudi Arabia is 782, which exceeds the parameters of many countries in the Asian and European regions (Saudi Arabia – economic indicators, 2020). However, many states have a higher rating, which means that the market influence on the specifics of work is felt, and the organisation cannot ignore the global trends in sales and production. As a result, for my company, these factors are the most severe, which explains the need for careful financial planning and reporting.

Socio-Cultural Impacts

This category of impacts is the least significant for my organisation. Since our activity does not imply close interaction with the population and is not designed to provide free services to a wide market, minor socio-cultural aspects are affected. In particular, the provision of ethical conditions for the implementation of the necessary HR practices should be respected, and the promotion of unbiased relationships among employees is to be encouraged. According to Chitescu and Lixandru (2016), inadequate social policies can have a negative effect on interaction among employees, for instance, disagreements motivated by cultural bias. However, for my company, such cases are uncharacteristic, and there are no manifestations of the significant role of such impacts.

Political Impacts

Political influence on the work of my organisation and, in particular, its HR area, is also felt. Based on available statistics, the country’s government budget is less than GDP by 9.2% compared with the previous indicators (Saudi Arabia – economic indicators, 2020). This factor means that in the field of oil sales, the authorities expect an increase in order to receive additional profits and to cover the difference resulting from lower revenues to the treasury. Personnel management requires a strict reporting policy and compliance with official resource allocation guidelines. As Chitescu and Lixandru (2016, p. 824) note, “the preferential allocation of funds/financial resources” is an issue that should be addressed to avoid conflicts with the government. Therefore, in order to avoid problems, the work of employees is to be monitored intensively, and conditions should be created to optimise operations to obtain more substantial profit. In Figure 2, Chitescu and Lixandru (2016) demonstrate how, in the opinion of respondents, political aspects can influence the HR policies of companies. This chart underlines the claim that the role of the government in coordinating the activities of business organisations is significant.

The correlation of responses in relation to political factors
Figure 2: The correlation of responses in relation to political factors

Forces Shaping the HR Agenda

For the HR specialists of my organisation, creating conditions for monitoring and coordinating the activities of employees in an intensive work environment is accompanied by the analysis of not only local but also global aspects of activities. According to Opara and Eboh (2017), based on modern business trends and market preferences, personnel management requires both solving immediate operational issues and adapting to working conditions in a highly competitive and dynamic field. In this regard, some forces may be distinguished, which largely affect the HR agenda and determine the need to implement appropriate practices for monitoring the work of employees.

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External Forces

One of the significant aspects that determine the specifics of the work of the HR department is globalisation. As Opara and Eboh (2017) argue, this trend influences the economic characteristics of activities by coordinating the directions of development and investments, geopolitical factors, for instance, establishing partnerships and other aspects. For my organisation, expanding the sphere of influence is one of the priority aims, which encourages HR specialists to focus not only on the local market but also other world regions to expand the business and gain more authority.

Another force that is essential to mention in the context of influencing the HR agenda is liberalisation. Opara and Eboh (2017) remark that simplifying collaboration through telecommunications and other tools makes HR management as transparent and unbiased as possible. In my organisation, employees have the right to rely on free access to information about current and upcoming projects, including those that require changes. As a result, subordinates participate in the process of forming targets directly and can express opinions concerning the features of the work process, thereby stimulating the activities of the HR department to meet their needs.

Competition may be viewed as a significant driver coordinating the activities of HR specialists and affecting the distribution of the workforce. Since my organisation specialises in selling oil, many professional employees work in this industry, and the possibility of moving to other companies dictates certain principles of personnel management. As Opara and Eboh (2017, p. 195) state, avoiding traditional restrictions and restraints has led to “free entry and free exit of more players”, and talented management is one of the significant aspects of recruiting and retaining specialists. These conventions have an effect on the work of the HR department and form a competitive environment.

Technology trends are the force that has an impact on the work of HRs and determines the nature of the changes introduced into the workflow. Opara and Eboh (2017) provide an example of a transition to modern electronic business standards and note that the modes of transmission and processing of information have changed significantly. In this regard, employees have more opportunities to monitor personal performance and can use highly effective tools to achieve high production results. HR specialists, in turn, utilise these technologies to control workers’ activities and implement intervention programmes based on the application of innovative approaches.

Finally, environmental forces are another force that affects the activities of the HR department in my organisation. A growing interest in this topic determines some of the restrictions that are imposed on business enterprises. As a result, as Opara and Eboh (2017) remark, these issues are raised at the global level and require companies to report on their progress and, in particular, data on the degree of environmental impacts. This, in turn, encourages HRs to develop unique work strategies and look for methods to engage employees in educational programmes about the importance of following these business principles. All the aforementioned external forces are to be taken into account when formulating the current HR agenda and promoting specific ways of developing the company in the market.

Internal Forces

When looking at the effects of internal forces on my organisation’s HR agenda, some important points should be mentioned. As significant drivers, strategic objectives and the ways of achieving them may be considered factors that largely determine the nature of all procedures and the specifics of work in the current business environment. To begin with, application activities should be evaluated since, as Geimer, Zolner and Allen (2017) note, if HRs do not have a clear vision of their roles and strategic development opportunities, this affects the operations of the entire company negatively. Therefore, the formation of a holistic view of the conventions of activities in the oil business and methods to optimise the work process is a crucial component in the field in question. Based on this internal force of application, the functional aspect may also be mentioned. Geimer, Zolner and Allen (2017) state that for HRs, the role of colleagues in creating the company’s image is significant. Consequently, an opportunity to build productive collaboration promotes development and is an essential force.

The staff structure of my organisation is the force that determines the direction of the HR department’s activities and coordinates the mode of its work. According to Geimer, Zolner and Allen (2017), if employees support and understand the goals that their company is committed, this allows HR managers to implement their intervention plans effectively. As a result, all these internal forces are significant aspects of strategic work in our dynamic oil industry.

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Tools for Analysing the Business Environment

By using individual tools as examples, one can evaluate the business environment in which my company operates and draw conclusions regarding the distinctive principles of assessment. As these techniques, special analytical models will be utilised – SWOT and PESTLE. Each of these methods provides an opportunity to consider those factors that affect the characteristics of the business and its prospects. According to Koshesh and Jafari (2019, p. 539), PESTLE is an abbreviation that means crucial drivers – “political, economic, social, cultural, technological, legal and environmental”. The SWOT analysis is another tool that may be applied in this context. Koshesh and Jafari (2019, p. 541) decode this abbreviation – “strengths, weaknesses, opportunities and threats”. In Table 1, both tools are presented in accordance with their aims and advantages.

Table 1: PESTLE and SWOT Analyses.

Tools Aims Advantages
PESTLE
  • The assessment of the key factors influencing the specifics of a business.
  • The analysis of development prospects based on those impacts that determine the characteristics of activities.
  • A focus on the work in those areas that form the main image of a company.
  • A complex assessment of the working environment and the possibility of applying the necessary development steps in those areas that have the greatest impact.
  • Obtaining comprehensive information about all impacts and an opportunity to compare their effects based on available data.
SWOT
  • To identify the strengths of business development, its weaknesses, growth opportunities and key threats that complicate business growth.
  • Provide information on the features of work in a competitive environment and a dynamically developing industry.
  • Assessing business growth opportunities based on valid information about all the nuances of work.
  • Avoiding the dangers of business decline in a complex environment.

When analysing the similarities and differences between these two tools, one can note that both models offer business assessment regimes based on potential impacts and operating conditions. These instruments are relevant for both small and large enterprises since the variables involved allow considering how successful and promising a certain organisation is in the given working conditions. In each technique, unique factors are applied, which create a common background for development and prospects. Regarding distinctive features, the PESTLE model focuses on narrower impacts, while the SWOT analysis offers broader evaluation criteria. In addition, a difference in the number of variables for analysis may be observed. Both methodologies are valuable tools used to assess significant indicators of business development.

Key Stages in Strategy Formulation and Implementation: HR Role

Formulating development strategies for any business is a fundamentally important component of management work. In the conditions of a dynamically developing oil market, establishing partnerships, the transition to new techniques for processing crucial data and other procedures play an essential role in enterprises’ activities. Throughout the development phase of my organisation and, in particular, its HR department, decisions regarding the implementation of appropriate growth programmes are based on the application of five key stages – analysis, formulation, evaluation, implementation and control. Hadaya and Gagnon (2017) describe these components as steps that make it possible to introduce any projects as efficiently as possible and utilise all the business potential to achieve high production results. Thus, these five aspects of the activities will be considered with a particular emphasis on the HR role at each stage.

Analysis Stage

At this stage, the analysis of the need for possible changes is carried out based on the current results of production activities. According to Hadaya and Gagnon (2017), decision-makers identify the investments that are required for the potential implementation of tasks and conduct research on the goals of upcoming projects. Due to the background obtained, all further stages are introduced successfully since all interested parties have comprehensive data on the specifics and reasons for a specific intervention. From an HR perspective, interacting with staff is an important aspect at this stage. Specialists of this profile convey to all the necessary information to employees and plan the workload in accordance with the anticipated tasks. This practice contributes to effective activities in a new mode.

Formulation Stage

At the formulation stage, a more detailed assessment of upcoming implementations is conducted. Hadaya and Gagnon (2017) note that it is essential to identify the areas of work and draw up a detailed mechanism for the implementation of all the planned tasks. For the HR department, the key focus is on developing specific strategies for all interested parties and finding the ways of achieving certain goals due to appropriate tools and techniques. In this case, special algorithms may be utilised, for instance, visualisation through charts and graphs, training seminars and other activities. All these procedures are aimed at ensuring the simplest and fastest implementation of planned changes in the workflow.

Evaluation Stage

In order to avoid mistakes and the incorrect interpretation of tasks, at the stage of evaluation, all declared and planned procedures are reviewed and assessed. According to Hadaya and Gagnon (2017), all the risks, potential costs and advantages of the proposed change strategy are analysed, which allows creating an accurate algorithm of work. The activity of the HR department, in this case, is to create an optimal assessment mechanism that may help obtain a detailed system of evaluating anticipated results. At this step, a crucial strategy is built, which contributes to assessing a particular project from the standpoints of efficiency and relevance.

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Implementation Stage

The implementation stage involves the direct implementation of all declared procedures based on the previous steps. Hadaya and Gagnon (2017) state that any process of changes should be under the control of senior management representatives, and transformations in the work process should not deviate from the plan. The HR role is providing the stable introduction of amendments and creating conditions for employees to fulfil their immediate duties as productively as possible. In addition, specialists of this department evaluate the subtotals and monitor the compliance with the nuances of a new programme. From a practical perspective, this phase is final and completes all the transformations.

Control Stage

This stage allows organising all the data on the success of a particular project and makes it possible to control the compliance with its conventions after the final implementation. As Hadaya and Gagnon (2017) note, procedures may include conducting financial evaluations, compiling performance reports, making long-term perspectives and other tasks. For the HR department, the main task is to assess the productivity of personnel through special analytical methods. Surveys, interviews and other tools for obtaining objective and unbiased information may be utilised. The analysis of outcomes can make it possible to determine whether all the changes are valuable, as well as find out the opinion of employees about the updated mode of operation.

HR’s Contribution to Business Ethics and Accountability

The functions of HR specialists include a wide range of tasks and obligations that allow optimising the activities of business enterprises and improve their performance indicators. In my organisation, employees of this profile are involved not only in staffing but also such adjacent areas as talent management, strategic planning and other fields. Accordingly, the roles of the HR department expand and affect various aspects of the company. In general, the contribution of these specialists to some of the nuances of activities is significant. On the example of such important components of production practice as business ethics and accountability, HR functions will be reviewed and evaluated.

HR’s Role in Business Ethics

Since HR specialists control the activities of personnel, they recognise the importance of productive interaction among colleagues and adherence to corporate ethics. In this regard, one of the tasks that are usually entrusted to this department is to monitor the principles of inter-professional communication to evaluate and implement the necessary practices for creating a favourable working environment. Dawson (2018) considers this topic and cites the following theory: HRs compare ethics with specific business objectives and approach to it as a tool to achieve goals but not a guarantee of success. This assumption is justified because, in addition to communication practices, other significant aspects of work should be taken into account, which also coordinate the development of a particular business. Therefore, HR specialists contribute to achieving ethical communication among employees since this element of activities is an essential driver of high productivity.

HR’s Role in Accountability

Accountability is one of those aspects of business activities that help avoid financial and other problems in case of a competent approach to their prevention. Jannah, Handajani and Firmansyah (2018) assess the perspectives of human resource management with respect to this working practice and argue that transparency is a virtue that effective control brings. The authors note that the concept of openness promoted by HRs is the key to obtaining all the necessary information for analysis and comparison, which, in turn, makes it possible to evaluate all key growth parameters (Jannah, Handajani and Firmansyah, 2018). In my organisation, this principle is supported, and the HR department does everything possible to help the senior leadership to receive all relevant data timely.

Business Performance and the Role of HR in Business Planning and Change Management

Measuring business performance is the task that contributes to obtaining relevant and valid information concerning the current outcomes of different activities, including financial, social and other areas. For these purposes, different methods are utilised, and both qualitative and quantitative principles of assessment may be applied. In Table 2, these two types of assessments are reflected, and all of them can be used successfully to find out the nuances of business performance in my organisation.

Table 2: Measuring Business Performance.

Non-Financial Financial
Employee interviews and surveys Profit indicators
Focus groups’ research and findings The dynamics of expenses and losses
Results of performance matrix created in accordance with HRs’ reports Cost-saving estimates

I can argue that my organisation stimulates the involvement of HR employees in analytical activities aimed at evaluating development opportunities. According to Nguyen and Teo (2018), who provide examples of the Vietnamese business market, the practice of establishing interaction is productive because all interested parties without exception have comprehensive information regarding crucial aspects of work and anticipated perspectives. When analysing the proposed indicators from Table 1, which allow measuring business productivity, I can note that financial criteria are not always the key factors of productivity. Based on the aforementioned data, the work process is largely determined by employee satisfaction with working conditions, which, in turn, affects their willingness to perform immediate tasks responsibly.

Based on the benefits of engaging HRs in planning practice, change management policies are also more sustainable if these professionals are involved. El-Dirani, Houssein and Hejase (2019) state that the HR department is the side that forms a systems approach to solving all the necessary tasks. I can also suggest considering Lewin’s change management model that, as Hussain et al. (2018, p. 123) state, consists of three phases – “unfreezing, movement and refreezing”. This concept implies implementing the necessary reorganisation changes with minimal labour and financial costs. All changes take place in stages, and I can promote such a model in my company since my colleagues from the HR department are aware of the principles of such a technique and can prepare the conditions for its introduction.

Sources of Business and Contextual Data for Planning Purposes

The data used for planning in my organisation are of a different nature. In the context of evaluating those sources that provide relevant information for analysing the business environment, two categories of these resources may be distinguished – internal (business) and external (contextual). For the HR department, the comparison of the data of these two groups can provide an opportunity to identify the key factors that need to be taken into account. In Table 3, this information is presented with its division into the two aforementioned groups.

Table 3: Business and Contextual Data Sources.

Type of data Source Advantages
Business Empirical interacting with employees (surveys and interviews). An opportunity to obtain objective information about readiness for any changes and employee satisfaction with the current operating mode.
Business Analysing performance indicators through official reports and statistical correlations. Accurate data about the prospects for development and growth based on the information on financial, managerial and other aspects.
Contextual Market competition indicators. An opportunity to assess the external environment to identify threats and potential possibilities of obtaining additional sources of profits and overcoming a competitive barrier.
Contextual Governmental interests. Creating conditions for legally justified activities and interventions controlled by higher authorities.

All the presented sources and their advantages are essential to consider when planning business activities and changes in the work process, and the participation of the HR department in this assessment is a crucial task. A comprehensive analysis of such factors can help minimise errors in the introduction of the necessary reorganisation procedures and, at the same time, create a productive background for activities. For my company, all of these sources are of high importance and are utilised regularly.

Conclusion

The evaluation of the current methods of analysing the business environment and factors influencing production activities with an emphasis on the role of HR specialists allows describing the specifics of my oil company. The forces that shape the HR agenda and the stages of strategic work are those evaluation components that contribute to obtaining comprehensive data on the productivity of changes in a dynamic market field. The role of the HR department in achieving business performance is significant, and accessible data sources confirm the need for a comprehensive analysis of all available resources to describe the peculiarities of my company.

Reference List

Chitescu, R. I. and Lixandru, M. (2016) ‘The influence of the social, political and economic impact on human resources, as a determinant factor of sustainable development’, Procedia Economics and Finance, 39, pp. 820-826.

Dawson, D. (2018) ‘Organisational virtue, moral attentiveness, and the perceived role of ethics and social responsibility in business: the case of UK HR practitioners’, Journal of Business Ethics, 148(4), pp. 765-781.

El-Dirani, A., Houssein, M. M. and Hejase, H. J. (2019) ‘An exploratory study of the role of human resources management in the process of change’, Open Journal of Business and Management, 8(1), pp. 156-174.

Geimer, J. L., Zolner, M. & Allen, K. S. (2017) ‘Beyond HR competencies: removing organizational barriers to maximize the strategic effectiveness of HR professionals’, Industrial and Organizational Psychology, 10(1), pp. 42-50.

Hadaya, P. and Gagnon, B. (2017) Business architecture: the missing link in strategy formulation, implementation and execution. Montreal: ASATE Publishing.

Hussain, S. T. et al. (2018) ‘Kurt Lewin’s change model: a critical review of the role of leadership and employee involvement in organizational change’, Journal of Innovation & Knowledge, 3(3), pp. 123-127.

Jannah, R., Handajani, L. and Firmansyah, M. (2018) ‘The influence of human resources, use of information technology and public participation to the transparancy and accountability of village financial management’, International Journal of Scientific Research and Management, 6(5), pp. 373-385.

Koshesh, O. S. and Jafari, H. R. (2019) ‘The environmental strategic analysis of oil & gas industries in the Kurdistan region using PESTLE, SWOT and FDEMATEL’, Pollution, 5(3), pp. 537-554.

Naghshbandi, N., Chouhan, V. and Saremi, H. (2017) ‘Measuring factors affecting adoption of HR valuation: manager’s perception’, Pacific Business Review International, 9(11), pp. 91-101.

Nguyen, D. T. and Teo, S. T. (2018) ‘HR orientations and HR department effectiveness in Vietnam’, Personnel Review, 47(5), pp. 1043-1061.

Opara, O. U. and Eboh, E. A. (2017) ‘Organization management today: setting the human resource agenda in the globalized competition’, International Journal of Development and Management Review, 12(1), pp. 193-201.

Saudi Arabia – economic indicators (2020) Web.

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