The key forces that shape the function of HR are
globalisation, technology and government action.
Globalisation is a key force that shapes the HR
functions as there has been a ‘growth in the extent to which good and services
are traded internationally’ (Taylor and Woodhams pg. 55). This has increased
competitiveness within the market which has an impact on HR. Over the years the
HR function has changed as more businesses are looking for HR professionals
that will add value to the business. E.g. HR Business Partner focuses on
projects that will increase the productivity of the organisation and will keep the
company competitive. More businesses are finding ways to make more profit,
through less expenditure on activities and gaining more money in income.
Globalisation allows companies to use services in
other countries where it will cost less money to produce their products.
Moreover, it uses the advantage of paying less money in wages for staff who
work in other countries compared to developed countries such as UK and USA.
This shapes the HR functions as some organisations
have an external helpline which are in less developed countries e.g. TalkTalk.
HR would have to keep up to date with the legislation of working conditions and
child labour to make sure that the employees are being treated in an ethical
way and are abiding by the law. In some cases, globalisation is a disadvantage as
some companies are known for underpaying employees and providing bad working
Technology is constantly changing and it effects the
way businesses carry out and advertise their products. It is cost effective and
more efficient however, it takes away the actual tradition of HR in a
workplace. There is an increase in companies that use HR service systems for
administrative work, reducing the need of an HR Admin.
Government action has a massive impact on how the HR
function operates within an organisation, it provides rules and regulations on
how businesses should run in the UK. A recent example is Brexit. This focuses
on the movement of people in the EU as there will be restrictions on
immigration. This means that HR will have to change their strategy towards
employment policies and would need to make sure that they are checking
employment statuses properly. This would also need to be portrayed in a way
that is not unethical and is not discriminating, as it would go against the
CIPD code of conduct.
Organisations always thrive to stay competitive and try
to avoid closures. In order to assist with crucial decision making, it is
important that organisations are able to analyse the business environment. Using
the SWOT analysis can help analyse this through identifying the strengths,
weakness, opportunity and threats of their projects. This was created by Albert Humphrey (1960) to
help assist companies in decision making. (CIPD 2015).
Being able to identify the strengths and weaknesses
of the business and identify the opportunities and threats, can assist in
shaping the strategic planning to ensure that it is a success and that it is a
necessity. Allowing businesses to identify their strengths, can be used as a
competitive tool (Unique Selling point) to see how their business can utilise
this as an advantage to achieve their goal. This can also be used as a
motivational tool to encourage others about the project they are getting into
and believing in the possibility.
this tool as an analysis can be very time consuming as it involves a lot of
emphasise on the organisations data. Moreover, the process would involve many
people who might have different perspectives on what they believe are the SWOTS
of the business which can also slow the process down and cause conflict.
Another tool that can used to analyse the business
environment is PESTLE. This stands for Political, Environmental, Social,
Technological, Legal and Environmental. These are all the external influences
that can occur in decision making. Moreover, it is important that not only
should businesses identify the internal influences such as SWOT but also
consider the external influences which using the tool PESTLE, helps achieve
Being able to highlight each external influence is an
advantage as it would help the organisation adapt to change in a positive way
and in an effective way. It also identifies the importance of effective
strategic planning. If the organisation is not aware of the external influences,
it can eventually cause the business to be unstable and end up closing. An
example of this is the recession that happened between 2008-2009. However,
using only this tool would be a disadvantage as it would be hard for businesses
to keep up with the external changes which can mean more investment in the
company. This also correlates with the use of SWOT analysis to make sure that
the expenses are used in an effective way through identifying the internal
Using both SWOT and PESTLE as a tool for analysing
the business environment is effective as stated earlier, SWOT can be used to
analyse the external influences whilst PESTLE can be used to analyse the internal
influences. In comparison, the opportunities and threats can be used when
analysing the environment through PESTLE. E.g. the product development of Apple
products. Each external influence in PESTLE can be analysed through identifying
the opportunity it would create for the business and the threats it imposes on
the business which shows them the need to develop their products.
There are different factors that have an impact on
the organisation and it’s HR function. It is important, to be able to identify
what these are. Furthermore, it helps tailor the HR practices and procedures in
a way that will favour the organisation.
The main external factors can be found through using PESTLE.
Brexit was decided by people within the UK and approved by the government. The
EU ‘has heavily influenced the employment law’, this is shown through a study
on the impact it has on HR (CIPD 2017). It was found that the standard 20 days
holiday entitlement was from the EU and it could be that holiday pay would need
to be recalculated. This would have an impact as it there is a possibility that
the entitlement could be reduced. The resource and planning report (CIPD 2017
pg10), shows the pressure Brexit will have on recruitment companies to stay
competitive. It was shown that, as there would be an increase in the difficulty
to recruit skilled staff, there would be an increase on the emphasis to develop
current staff to have high skilled workers.
Within the social factor, the wellbeing of employees
is very important as there has been an increase of stress related cases in
workplaces. The absence management survey (CIPD 2016) shows that stress is the
most common cause of long term absence, whilst it is the second in short term
absence. This means that the HR function would need to find ways to promote activities,
which will encourage the wellbeing of staff and will help reduce stress. This
will also effect the organisation as they would need to spend money within that
area. Some companies would employ an HR Business Partner who is a specialist in
that field to help bring in fresh ideas. This could be a negative and positive
impact. The negative impact is that companies would need to spend more money to
improve the wellbeing of staff. The positive impact is finding ways to improve
the workplace, would reduce staff retention.
The internal factors also need to be considered and this
is demonstrated by Michael Porter’s five forces (1979), as he shows the
importance of each force. Having new entrants can affect the organisation as it
would mean that the company would need to continuously stay competitive. The
stakeholders will have a massive impact on the company. Each stakeholder, has
needs that need to be met and they need to see the benefit in investment. The
stakeholders consist of the shareholders, customers, supplies, trade unions
The shareholders invest money into the organisation
and demand more profit. Customers are always looking for deals that would
benefit them and products that attract them. Furthermore, trade unions are an
independent body that support the employees to make sure that they are being
treated fairly. This correlates with the HR function, as there is pressure on
organisations to remain competitive. The HR function would need to tailor their
activities and aims to assist in finding solutions to these issues through
investing in the people within the organisation and making sure that they are
following the right procedures.
In an organisation, a strategy needs to be formulated
to ensure that it meets its overall goal and achieves its purpose however, this
can be influenced depending on the approach the organisation will use. An
organisation can decide to use a traditional method (rational approach), where
the senior managers are solely responsible for the strategy-making and use
tools such as SWOT to measure the effectiveness. However, an organisation can
decide to use an emerging method which would involve more people within the
organisation. This allows the organisation to ‘respond to the realities of its
environmental position’ (Taylor, S. and Woodhams pg. 66).
There are different stages to strategy formulation.
In the first stage, the mission, objectives and vision of the organisation is identified.
Using the SWOT analysis will help identify what the strengths/weaknesses of the
organisation are and knowing the opportunities within the market whilst
acknowledging the threats. From gathering all the information needed, the
organisation is able to use their strength as an opportunity within the market
but it is also important to identify the position of their product market. This
can be achieved through the use of the Ansoff Matrix.
The Ansoff matrix was invented by H. Igor Ansoff (1957)
and consists of 4 marketing strategies which are Market penetration, Product
development, Market development and Diversification. The most profitable position an organisation
needs to be in is the ‘Market penetration’. This occurs when the existing
products are still within the existing market. An example of this would be the
‘Coca Cola’ which was achieved through using different promotion techniques e.g.
adding names on their products. Some companies would need to develop their
product (product development) and market (market development) to stay
competitive. The last strategy is ‘Diversification’ where an organisation that
sells new products within a new market would be situated at.
In the second stage of strategy formulation, the
organisation must go through an environmental and organisational analysis. As
stated earlier the strengths and weaknesses of the organisation can assist with
analysing the organisation. The role of HR in the internal analysis would be to
support the organisation in making sure that the strengths are continuous and
the weaknesses are developed into strengths. This could be achieved through the
use of training people within the organisation, encouraging healthy
competitions to promote innovative ideas and also making sure that the programmes
needed for development are cost effective. Furthermore, as this allows the
organisation to identify weaknesses within employees and departments, it helps
the issue to be resolved quickly. Consequently, where individuals are
continuously underperforming, it is important that HR ensure that the right
processes are made and in cases of dismissal that the organisation or
themselves are not being unethical in any way.
Identifying the opportunities and threats can help
analyse the external environment. HR can ensure that the organisation is not
going against the law during their strategic decisions and are also making sure
that they are being ethical in their processes. An example of this is the BBC
Scandal. The organisation decided to pay people a large amount of money to
leave their position due to cutting costs. This was found unethical and the HR manager
was made accountable for going forward with the decision as she went against
the CIPD code of conduct through being unethical.
Whilst analysing the external and internal factors,
the organisation can always relate back to the Ansoff Matrix model, to see
which position they are in and to make any relevant changes in order to be in a
better position at that certain time.
Within the private sector, the main aim of the
business is to make profit whereas in the public sector it is also about
providing excellent services. In private sector, they focus on traditional
indicators (finances) to measure their organisations performance through
looking at the revenues, operating costs and stock turnover. This is
demonstrated through looking at the annual account and balance sheet. In
contrast, public sectors would use modern indicators that does not only focus
on the financial performance. Kaplan and Norton (1992) created the ‘balanced
scorecard’, which helps looks at the overall performance whilst considering the
vision and strategy of the organisation.
The scorecard measures the financial performance, the
customer satisfaction, the learning & growth of the business and the
internal business processes. Each section helps the organisation to see the
objectives, the type of measures that need to be used, the targets that need to
meet the objectives and the initiatives. HR can assist with the business planning
using the scorecard as it helps highlight what area the organisation is currently
underperforming in. An example to explain this is the organisation
underperforming in the customer aspect.
The HR department can help find out the reasons for
this outcome. A common example could be the organisation suffering from staff
shortage due to high absenteeism. The objective would be to reduce staff
absenteeism and improve productivity. It would be measured through seeing an
20% decrease in staff absenteeism. The targets set would be to achieve this
within 9 months. The initiatives set from HR, would be to create processes that
will improve the employee’s engagement through demonstrating the importance of
wellbeing, as most absences are due to employee’s dissatisfaction and stress.
The use of ‘human capital’ would need to be
influenced as it allows the organisation to understand the needs of the staff
to help them improve productivity and provide excellent customer service. It
also shows the importance of investing in people. As HR assist in business
planning, they would also need to assist in the change process. Ulrich (1997) has
identified four roles of HR that can support the change process.
The first role is the ‘Change Champion’. This identifies
the need for a change through using internal reports and surveys to highlight
the necessity of change. The second role ‘Change Facilitator’, supports the
process through effective communication and helps answer questions or concerns
raised from the stakeholders. The third role ‘Change Designer’ develops and
implements the HR practices that will encourage the change. An example of this
would an HR Business Partner, who helps with projects such as rewards, training
and resourcing talent. The last role ‘Change Demonstrator’, actively assists
change through demonstration within the HR function.
To assist with planning purposes within an organisation,
it is important that the effectiveness of the processes is measured. This is
achieved through collecting data and seeing if it is meets the needs of the
organisation. Through collecting data, it will enable the organisation to see
whether they are on the right track or whether there needs to be a change in
their planning. The type of data that is collected depends on the industry the
organisation is in and what is needed to achieve a certain outcome.
An organisation that provides customer service in the
sales sector, would need to focus on its service delivery, making sure that
they are providing the best services. Collecting feedback from the customers
and employees can help see the effectiveness of the service they are providing.
Through using this data, the gaps and weaknesses will be shown which will
enable HR to implement processes that will help the organisation improve in those
areas. There are other sources of internal information that can be used to
support this such as, finding data on quality standards, customer complaints
and mystery shopper reports.
The use of workshops can be used to provide the staff
more knowledge on how they can use their skills and talents to improve their
day to day activities. Moreover, they can use some employees who perform better
to help those who are underperforming through shadowing and seminars. Some
organisations would bring an external expert within their sector to help
motivate others. Organisations within the sales sector practise this method as
they use top performers within the industry as a motivational tool. Whilst this
is an advantage, an organisation who is trying to reduce costs may not use this
method and will end up using a different method like shadowing, to save money.
The findings of the data collected, can help the
organisation decide on whether they can proceed with their planning or whether
they need to stop the process until a certain area has been dealt with. An
example of this is an organisation who has high percentage of staff turnover.
Using data from internal reports that show how many employees have left over a
certain period and the notes taken from exit interviews, can be easily accessed
by HR. This will help identify the issues of this through the information they
have received. They will also be able to see if there are any trends e.g. if
there is a common trend on the period people leave or high percentage of staff leaving
a certain department. This will then be a raise of concern that HR can provide
to the managers and would need to be investigated further if needed. At this stage, HR can slow down any major
planning process that the organisation has (e.g. merging with another company),
to tackle the issues to stop it from continuing after the merge. The company can
focus on improving the certain area, which will help them save money on losses
and will improve the image of the company.
CIPD. (2017). PESTLE Analysis |
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[Accessed 23 Jun. 2017].
Taylor, S. and Woodhams, C. (2016).
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Resourcing and Talent Planning 2017.
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[Accessed 26 Jun. 2017].
Www2.cipd.co.uk. (2017). What will
Brexit mean for UK employment law? – Policy at work – CIPD Blogs – CIPD
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[Accessed 26 Jun. 2017].
Absence Management Survey 2016. CIPD
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[Accessed 26 Jun. 2017].
[CLF1]You have provided a good summary of both SWOT and PESTLE. You demonstrate a clear understanding of
their application and the potential issues that may arise., including the use
of an example to bring these to life.
The question asks for the analysis of 3 models, and the inclusion of
Porter’s five forces may have been a useful
Finally, you may wish to consider the
inclusion of diagrams when discussing and analysing models as this can
sometimes aid understanding.
[CLF2]You demonstrate a good understanding of the external factors, and
you introduce Porter’s five forces as a model that helps to analyse