An Analysis of Internal Forces that Can Shape the HR Agenda
Human Resources, HR, departments of corporations around the world have been compelled to transform from primarily operational roles to the assumption of duties, which serve the goals and needs of their institutions over the past few decades. The gradual transition has got most HR leaders contemplating more about why and how they should deliver their services.
According to Greve and Teh (2018, p. 23), in many ways, modern HR managers around the world mimic groups of information technology, with the exception that their immediate concern is on ‘people change,’ which is widely reflected in their agendas. In a review of literature on the topic, Trieu (2017) studied the primary concerns that have been shaping strategic HR agendas for the leading corporations around the world. The findings of the study suggest trends, which the succeeding paragraphs report.
In 1997, Dave Ulrich introduced his ideas and concepts of the Ulrich HR management model. He described the new roles that HR must play in a modern organization to help the company achieve competitive advantages and show business other value. From that moment, the global HR community received a new impetus to transform its function. Ulrich’s HR model states that HR must exist inseparably from the needs and strategies of business development. In some cases, it is necessary to initiate the changes necessary to improve the competitiveness of the company. Thus, HR needs to focus not on its functional processes as such but on the outcomes that the function achieves about the business result.
According to Ulrich’s HR model, an organization helps increase competitiveness by playing crucial roles. It is noteworthy that the model itself calls the names of functions included in everyday life “metaphors” (Sekhar, Patwardhan & Vyas 2017, p. 74). Descriptions of the tasks, their names, and the basis of the model which they reflect are the subjects of ongoing discussions, and often confusions. It is important to precisely define the description of each of the components (Sekhar, Patwardhan & Vyas 2017, p. 76).
HR competitiveness increase can be done by including four main blocks: a short description of the role, the measurement of effectiveness, the attributes of the position, and the interpretation of the task. The key to this role is the participation of HR in the development of a business strategy. A strategic partnership is promoted by asking relevant questions to a business regarding the implementation of the plan in practice before the strategy is approved. Thus, it is critical to developing appropriate HR policies and procedures that will ensure the achievement of results.
In Warwick’s HR model, human resource management effectiveness is measured by the organization’s business objectives. Attributes of a role are participation in the process of developing a business strategy (mainly a business, not just a functional one) and contributing to its operationalization. The purpose of error interpretation is often perceived solely as a functional one. That is, HR is in the team, or the board of directors should be responsible for HR questions.
In addition, most often, the contribution of the task is limited only to the development of a functional strategy based on a business operation. However, the Warwick HR model suggests that, as a strategic partner, HR will go beyond its function and look at business more broadly, applying knowledge in related areas, such as finance, marketing, manufacturing, and procurement. If the human resource manager starts discussing the development prospects of the company with the director of marketing, production, or logistics, they will find arguments in favor of their point of view. These statements will go beyond that functional area for which they are responsible.
To be a strategic partner in modern reality, it is not enough to take a business strategy approved by top management and develop an HR strategy based on it. Business needs input from HR, which will allow covering the whole industry. It is important to contribute to the development of the business strategy itself and influence decision-making in the field of business development. In practice, people can see a significant number of HR managers who can develop professionally and implement HR strategies based on a business strategy. However, the next step, which is a contribution to the development of a business strategy, is not yet given to many.
Organizational cultures play another critical role in the determination of HR strategies in the contemporary business environment. Numerous studies, including Hartnell et al. (2019), report the importance of corporate cultures in the success of businesses. As the latter literature indicates, corporate cultures determine the way organizations run, and most managers desire every employee to understand the approach that their company adopts to the management of its operations.
Notably, culture is organic, which implies that not only does it require a leadership approach, but it also needs a generalized holistic understanding of how organizations are managed, what they believe in, their missions and visions, and the core values that drive their models of business. The fact that dominant organizational culture is reliant on the latter approach suggests the need for HR to engage more workers in the interpretation of their organizational cultures. Nevertheless, the situation does not always mean that HR enforce their beliefs on the employees since forcing others into doing so may have adverse outcomes, including diminished job satisfaction.
Consequently, the opportunity for HR departments of global businesses is to ensure that workers comprehend their organizational cultures, the strategic direction of their corporations, and the proposed approaches to attaining the set goals and objectives. Literature underscores the importance of the HR managers to communicate their companies’ strategic visions regularly, which allows the perceived culture to evolve within the whole organization. While every company has its own organizational culture, The Virgin Group is exemplified for having one of the most organic approaches to doing business; it emphasizes the need for flexible approaches to operating (Gillespie & Reader 2017, p. 30).
Because of the challenging nature of the modern corporate atmosphere, companies are always striving to be as competitive as possible, which is why improving their processes is another critical internal issue shaping HR agendas. HR managers raise concerns about the strategic directions of their companies and they hope to solve the perceived or experienced challenges through improving their operating processes.
Despite the importance of process improvement, the literature suggests that the delivery of such plans need to be seamless (Hartnell et al. 2019, p. 30). In most cases, CEOs require the engagement of every employee in the execution of adopted changes to the operations of their companies. Google Inc., for example, is one of the most reputed technological companies, which strives to remain as innovative as possible through improvements in its internal operating processes (Jiang et al. 2019, p. 428). At the company, every worker understands the implications of operational efficiency on the realization of the corporation’s goals, especially because the management keeps an open communication approach through which the CEO proposes changes and improvements at regular intervals.
External Factors Affecting Organizational Performance and their HR Implications
Apart from internal factors, external forces also influence HR strategies for organizations. Studies report that the practice of strategic HR management is a result of globalization (Greve & Teh 2018). Many factors affecting and shaping globalization have implications for the HR strategies that companies around the world develop, which informs the need to understand these factors and their potential effects on the nature of HR management.
Economic factors play one of the most significant roles in shaping corporate HR strategies both directly and indirectly. The economic landscape of a country, for example, is related directly to the dynamics of its labor market, which has subsequent effects on the selection and recruitment patterns of organizations (Greve & Teh 2018, p. 24). Notably, economic conditions determine the minimum wage rate that companies should pay their workers, which has critical outcomes for the demand of laborers.
During difficult economic times, such as when the economy is depressed, most companies lose the ability to hire new and more skilled employees, which leads them into concentrating on their current HR pools as one of the strategies of cutting operational costs. The focus of HR during such times is on capacity development to compensate for the inability to hire new and more skilled employees (Greve & Teh 2018, p. 25).
Contrarily, most companies wish to hire new employees when they perceive the incentive of doing so is higher than the economic risks involved, especially when the economy is at its peak and when the labor market is flooded with skilled workers. The hospitality industry is one of the examples of sectors that respond to changes in the economic conditions through HR strategies; they hire during peak seasons and fire during recessions.
Though separate, legal and political factors have a further combined influence on the HR agendas of organizations. A nation’s legal and political environment contributes to its standard HR practices. Labor and economic laws, such as health and safety regulations, affect the approach to HR strategies for companies. More countries are tending towards the adoption of stringent regulations that promote the rights and wellbeing of employees.
For example, modern HR managers understand the implications of sexual and physical harassment, the effects of unions, and discriminatory practices at the workplace. Much as the laws and regulations vary according to regions and countries, they regulate the approach to HR, with most of the corporations seeking to avoid legal and political attention because of the adverse economic outcomes that are associated with such scrutiny (Robertson et al. 2016, p. 78).
British American Tobacco Fiji company is one of the examples in literature that highlights the effects of legal and political factors on HR agendas. Precisely, before being compelled by the Essential National Industries Employment Decree, the company did not allow its female employees maternity leave (Robertson et al. 2016, p. 78).
Legal factors are often interwoven with political ones since most laws have political foundations, which explains why advocacy in Fiji led to the changes in the HR strategies of British American Tobacco. In the US, HR managers are aware of the provisions of the Civil Rights Act of 1964, the Equal Employment Opportunities Commission, and the Occupational Safety and Health Administration in championing equal treatment and employee safety at the workplace (Hahn, Truman & Williams 2016, p. 22).
Cultural factors also have a role to play in the determination of the HR agendas for companies around the world. Since contemporary HR management is a result of globalization, the global culture is affecting the approach to which organizations manage their workplaces significantly. For example, HR managers understand the effects of cultural diversity, especially because they have to respond to the challenges of handling workers from different parts of the world who hold contrasting worldviews. Literature lauds the criticality of cultural competency from managers by mentioning that it facilitates the co-existence of workers from diverse backgrounds in the workplace (Barazandeh et al. 2015, p. 18).
As the latter cited study suggests, cultural diversity is attributed to higher productivity and creativity in the workplace, which informs its reported impact on HR strategies. Managers around the world are engaged in training their employees on workplace conducts that facilitate cultural diversity, such as effective communication skills, group work, and other related aspects, which is exemplified at GAP Inc. (Barazandeh et al. 2015, p. 18).
Modernity has come with an improvement in corporate technologies, and as expected, the changes affect HR strategies. Presently, close to sixty percent of global companies are using at least one business technology in the management of specific aspects of their operations (Puklavec, Oliveira & Popovič 2018, p. 240). Most importantly, as it concerns HR management, global companies are adopting HR tools for, selecting, tracking and appraising the performance of their staffs (Puklavec, Oliveira & Popovič 2018, p. 241).
The HR technologies are also affecting the recruiting strategies of such companies because of the growing importance of appropriate technologies. For example, while computer skills were an added advantage in the 90s they have become basic, which is why most companies require their employees to be equipped with excellent computer capabilities. Most firms advertise vacancies online, which exposes them to many job candidates for interviewing and possible recruiting. Without the use of technologies, it would be difficult for corporations to access large pools of skilled employees as they do now, which is why most HR strategies are founded on online hiring technologies.
Comparing Two Environmental Analytical Tools
Reviewed literature in the preceding section reveals the effects of the external environment on HR strategies. Consequently, corporate managers should develop an awareness of the different tools that they could apply in analyzing the external environment. Table 1 compares and contrasts two analytical tools, the PESTLE and SWOT analyses.
Table 1: Similarities and Differences of the SWOT and PESTLE Tools.
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As table 1 suggests, the SWOT and PESTLE analysis tools have a relationship, which is the fact that they can be applied simultaneously in the development of strategic plans for organizations. About HR, it is plausible for organizations around the world to understand both the internal and external factors with implications for HR agendas as reviewed previously, and the two tools could be applied for such purposes.
However, since brainstorming is the primary approach used in determining the influence of the discussed factors, some HR managers may be tempted into giving poorly estimated ideas about the contributions of both the internal and external environments on their workplaces. Consequently, literature advises the need for a thorough consideration of factors in each of the categories in the SWOT and PESTLE tools, which can only be attainable through research (Moutinho & Phillips 2018, p. 66).
A Summary of the Key Strategy Formulation and Implementation Stages
Strategy is an essential element for success now as it was decades ago. The only challenge for modern managers is the fact that the contemporary business environment is more unpredictable now than it was in the past, which informs the need for a more careful approach to planning; hence, the emergence of strategic planning. The extant literature proposes several approaches to planning (different in the fact that the number of stages involved differs accordingly) (Ansoff et al. 2019).
However, an analysis of the steps involved in strategic planning reveals four primary stages, which are the need to determine the business’s current position, to create a strategy, develop an implementation plan, and manage performance (Ansoff et al. 2019, p. 101).
In determining their current position, managers are required to identify strategic issues that need to be addressed by the considered planning process. During this phase, the planners could be interested in the market and industrial statistics, which could be collected using the tools of analyzing the external and internal environments (Ansoff et al. 2019, p. 93). The HR department has a critical role to play during this stage, especially in the conduction of an analysis of a company’s internal environment through the SWOT analysis.
This report has already underscored the involvement of the HR department in the articulation of an organization’s corporate culture, which is important for the second phase of the planning and implementation of a strategic plan. Precisely, organizations need to review the strategic issues to be addressed according to the mission, vision, and values of the organization. According to Hartnell et al. (2019, p. 27), the three elements of organizational culture are useful in the development of both long and short-term strategies and the assessment metrics that could be applied in the planning processes.
Once a strategy shall have been formulated, planners shall need to deliberate on the approach to its implementation. The HR department could play a significant role in studying the resource capabilities required for the implementation of the proposed strategic plan, which they can do through SWOT analysis. In addition, the department ensures that the human resources (employees) are aware of the critical changes that would be occasioned by the proposed strategic plan, which limits the chances of failure.
Lastly, the process entails performance management whose role is to assess the effectiveness of the implementation process. During this time, planners track and maintain communications between departments and the concerned stakeholders and issue regular updates on the rollout of the proposed programs (Ansoff et al. 2019, p. 104). The HR department could play a role in providing the required personnel for the implementation as well as for tracking progress.
The Role of HR in Business Ethics
Business ethics is primarily an HR role. The existence of corporate ethics is intended to guide the relationships among employees and between workers and executives in the workplace. Developing a code of ethics for adoption in any workplace requires proper coordination between departments as well as in-depth consultations with the employees to ensure that the adopted policies are not enforced on them (Sarvaiya & Arrowsmith 2018, p. 830). The HR department, in collaboration with other stakeholders, articulates elements from the external environment, which include the political and legal frameworks governing the nature of corporate operations into the codes of ethics (Sarvaiya & Arrowsmith 2018, p. 831). Overall, the entire idea of business ethics revolves around the HR department.
The Role of HR in Accountability
The previous subsection has articulated the critical role that the HR department plays in the development of codes of ethics for specific workplaces. Notably, accountability is one of the clauses in the codes of ethics used in most workplaces. The explanation indicates that the HR department of any institution has a role in ensuring that the relationships and processes in the workplace are managed with integrity and accountability. The HR manager is charged with the articulation of the core principles of their workplace that streamline the employees towards accountability.
Different Ways of Measuring Business Performance
The core of this paper is on strategic management, which suggests the need to determine the approaches that corporations apply in assessing the effectiveness of recommended strategies. Since strategy is manifested in performance, managers could look to performance metrics for determining how successful they have been with planning. Table 2 summarizes the different ways in which corporations measure their performance.
Table 2: Ways of Measuring Business Success.
|Method of Assessment||Description|
|Financial Statements||Assessing data from financial statements is one of the most common approaches to determining organizational performance for specified periods. A positive trend on the financial statements is a direct indicator for growth in the financial parameters of a company, including the net incomes, profits, and volume of assets (Serrador & Turner 2015, p. 33).|
|Customer Satisfaction||As do financial metrics, customer satisfaction data is a critical indicator for the success of any for-profit organization primarily because it is inclined to measuring the profit objective that is a universal aspect of all businesses.|
|Averaging the number of New Customers||Customers play a critical role in financial growth. All business institutions strive to have a faster rate of customer acquisition compared to the loss that makes this assessment method critical for them.|
|Conducting Performance Reviews||Performance reviews can be applied in assessing different aspects of an organization. Usually, the assessment is determined after regular periods, and it is measured against set standards.|
|Staying Current on the Market||When businesses perform well financially, it could be attributed to the fact that their industry is at its peak or that the organization is aggressive with its marketing strategies. However, stagnated and declined financial data could imply a null market, which is why comparing market performance in the industry is a valuable way of assessing success (Serrador & Turner 2015, p. 37).|
|Assessing the Management’s Expectations||Every time an organization sets goals, they expect to track them through the set period. Therefore, following up on the success indicators during the period is another way of determining the levels of success of the set strategies.|
The Role of HR in Business Planning
Corporate strategic planning benefits from the input of personnel with the appropriate knowledge concerning the issues that need to be refocused. Consequently, the HR department should be involved because its core function concerns staffing—it provides the right persons for the planning and execution procedures. Furthermore, strategic planning often disrupts the norm at the workplace and promotes the need for re-organization. As explained previously, the HR department is charged with maintaining stable working relationships. For example, while other departments could manage their approach to the process, the HR department is in charge of coordinating the entire workplace (Sarvaiya & Arrowsmith 2018, p. 830). Lastly, HR conducts the training required to execute the formulated strategies, which is one of the fundamental factors for success.
Role of HR in Change Management
Changes in the workplace are at times undesirable because they disrupt the norm and result in inconveniences associated with traditional ways of working. Since changes to processes and structures in the workplace are instituted by people, the HR department is charged with the responsibility of ensuring seamless transitions from one activity and process to the next (Neves, Almeida & Velez 2018, p. 250). For instance, the HR manager conducts effective communications and training of staff concerning the change process, which gradually reduces the probability of failure.
How to Consider Internal and External Business Information in Planning
Different sources of internal and external data can be used in strategic planning, but this paper addresses HR metrics and industry information as respective internal and external data sources. Businesses can use HR data to gauge the cost of the recruitment process, for example, through considering aspects, such as interviewing, advertising, and training of the new workers. The company can also factor in other data, such as the appraised productivity levels for individual employees and their average attendance, and use the information in determining the plausibility of a recruitment strategy.
Externally, trends in HR practices, competitive forces, and government policies affect strategy adoption by organizations. For example, business trends in HR, such as talent attraction and retention, the use of technology, and fringe benefits among others lead companies to adopt specific approaches to managing their HR policies. Competition in the market also informs the approaches to recruiting—they determine whether it is right to hire or fire—while government policies influence the composition of the workforce through policies on diversity, remuneration, and others. Combing the two types of data provides useful metrics for policy formulation by HR groups.
The importance of considering the procedure for organizing internal and external sources for analytical activities at enterprises is predetermined by several points. It includes conducting an economic analysis that creates conditions in the form of preparing an information base. In addition, there is a set of reasonable options for current and future planning, for solving various issues about the activities of enterprises of various organizational and legal forms of management, including HR planning. Improving human resource management efficiency, improving the quality of work, and the transition to the release of new products are associated primarily with the solution of the problems of HR management. There are several influential factors, such as material, technological, financial, and personnel.
The use of the most effective forms of HR metrics is inextricably linked with the active use of the internal information space of an enterprise. The state of a firm is determined by a specific type of resource supply for management, which is an information resource. The set of methods and techniques for organizing information processes in production and HR systems is the content of the concept of forming the information resource of the high-tech production management system.
The management system of the information space of the HR metrics of an organization is established in a specific environment characterized as an information resource of the management system. It is a system for organizing the flow of internal and external information, as well as methods and means of searching, processing, and distributing information in the organization.
The structure of the organization of external information flows in several production systems has its characteristics. It is manifested in particular in banking and media production, where clients can also act as partners, which determines the specific features of the organization of the production process and the organization of information flows. For example, in media production, partners of the production process can be divided into two main groups: suppliers of materials and equipment and customers for products (Seedah, Sankaran & O’Brien 2019, p. 59). They can be either an independent publishing house or a prepress service of the printing industry.
Information management is based on operational data contained in various planning, production, or sales documents. These external data reflect the actual or planned state of the personnel management and economic process. They are introduced into the information system by the technologist or manager of the proposed procedure, realizing the corresponding management function, which is the business function.
The management process is based on the results of the processing of operational data that involves the selection and application of control actions that managers (technologists) carry out, and the relevant departments of the organization. As a result, the specified efficiency of the production process is maintained, and the corresponding business function is implemented.
In the organization of economic analysis, it is particularly important to determine the ratio of external and internal data of the implementation of analytical work, both of which have their advantages and disadvantages. The benefits of a centralized system of organization of systematic activity include the centralization of all analytical calculations, the higher possibility of developing and improving the method of economic analysis of individual indicators in a single-center, increasing the responsibility of performers for the results of the review, the possibility of more complete mechanization and automation of analytical calculations. At the same time, managers of all ranks can use ready-made practical results and conclusions of the analysis to make sound management decisions.
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