The Importance of Effective HRM Policies in Organizations
In today’s competitive business world, the importance of the implementation of effective human resource management (HRM) policies have become a significant part of the strategic planning in organisations. The objective of this report is to determine the key factors which affect the evolving role of HR in the contemporary business world. This report will analyse key forces which shape the HR agenda to support the performance of the business. This report will compare different tools which are used by marketers in order to analyse the business environment of a corporation. Various factors will be assessed in the report which has an impact on the company’s business and HR functions, and examples of internal and external factors will be evaluated. In this report, various stages of strategy formulation and implementation will be discussed along with evaluating the role of HR in business planning and change management. Different indicators which are used by corporations to evaluate the performance of business will be evaluated in the report, and different sources for assessing and utilising the planning process will be analysed in the report as well.
Following are various factors which are necessary to be evaluated by HR professionals because they shape the HR agenda.
As the competition between corporations grows at an international level, the importance of talent management has increased substantially. The HR professionals focus on hunting for talent and value, and they also emphasis on polishing the talent skills of current employees for further improvement (Dries, 2013). Many industries are also facing shortage of talent; a good example is the technology industry which is facing a shortage of talented employees. The corporations operating in the industry such as Google, Apple, Amazon, Facebook and others hire employees from all across the globe to fulfil their talent demand. The HR department in these corporations also focuses on providing training and other facilities to employees that assist them in developing their skills and knowledge to fulfil the demand of talented employees. For instance, Google provides its employees the facility to learn new things for free on the campus, and they also have the option to work on their projects; these facilities polish the talent of employees by increasing their skill set and knowledge which is crucial for their success (Ong, 2018).
The workers who are satisfied with their job are more likely to engage in the organisational activities based on which the executives are able to collect important insights which are important for them to form business strategies (Alfes et al., 2013). The HR department plays a crucial role in increasing the engagement of employees in the workplace. A good example is Amazon which is leading e-commerce company that offers its services across the globe. The company engages employee engagement by providing its employees the option to contribute their ideas directly to the management of the company. The internal website of the company which is accessible by employees has an option of virtual idea box that is easily accessible, and it is open for suggestions by employees (Moon, 2015). These suggestions are evaluated by the management, and the employees’ whose suggestions are good are given rewards by the company to appreciate their engagement.
Key Factors That Shape HR Agenda in Business
The importance of implementing an effective organisational culture has increased substantially in corporations to avoid workplace disputes and increase the feeling of fraternity between workers. Positive organisational culture is supported by the HR department which assists the corporation in achieving its primary goals (Aswathappa, 2013). Effective organisational culture leads to the success of an organisation, and a good example is Apple Incorporation. Apple has become the world’s first technology company which has reached the market capitalisation of $1 trillion, and it has become possible due to effective organisational culture. The company is known for its effective culture and its habit of doing things the “Apple way”. The culture of the company was established by Steve Jobs, the co-founder of Apple, who focused on the demands of customers rather than profit maximisation (Moreland, 2011). The company has the culture of breaking boundaries and finding new ways to do things which make its one of the biggest innovative corporations in the world which have become possible due to its supportive and collaborative organisational culture which foster innovation among employees.
As the technology grows, it becomes a key factor which forces the HR agenda in corporations. Effective use of technology is significant for companies; however, it leads to many HR related issues as well. For instance, the improvement of process of the organisation by using technology resulted in reducing the requirement of workers in the company since the process becomes automated (Armstrong and Taylor, 2014). It creates many challenges for the HR department. A good example is DHL which is a global leading logistics company which provide international express mail, parcel and courier services to its clients. The corporation is using technology to improve its process by using robots to do the work of humans. It uses collaborative robots for leviathan which perform actions such as packing, kitting, and pre-retail tasks (DHL, 2016). It raises issues for the HR managers since it leads to retrenchment of employees, therefore, while forming business policies, the process improvement affects the HR agenda in the corporation.
The population of implementation of effective CSR policies in the corporation has increased across the globe as more and more companies are adopting this structure to perform their operations. In a CSR structure, the corporation forms business strategies while focusing on the requirements of stakeholders rather than profit maximisation (Morgeson et al., 2013). The stakeholders include employees of the company based on which the HR department has to provide them appropriate health and safety services and focus on their personal development. Accenture is a good example because the company is considered as one of the best places to work for as per the list of Fortune (Fortune, 2018). The company cares about its employees and ensure that it ethically perform its operations. It provides various health and safety related services to employees and the HR department also engage in their personal development, therefore, it affects their future agenda.
Comparing Tools Used by Marketers to Analyse Business Environment
Following is a comparison between three tools which are used by corporations for analysing business environment.
The SWOT analysis is used by corporations to look deeply in evaluating their internal potential by evaluating their strengths, weaknesses, opportunities and threats. It provides a bird-eye which to the factors of the company which assists in evaluating whether the goals of the company are attainable. It provides solution to the corporation to tackle its competitors; however, it remains on the internal fortitude of the concept (Yuan, 2013). Most corporations use the SWOT analysis, to identify their own competitive advantage which enables them to exploit business opportunities while leveraging their key strengths.
This model provides five forces which affect the attractiveness of the industry in which the organisation operates. These five forces include the threat of new entrants, bargaining power of suppliers, bargaining power of customers, threat of substitutes and competitive rivalry. Unlike the SWOT analysis, each of these forces is external in nature which affects the business of corporations. It enables corporations in evaluating the competitive rivalry which they face while operating their business in their respective industry. The factors such as bargaining power of suppliers and customers drive the prices of products and services of corporations based on which it becomes important for the company to ensure that it keeps an eye on these factors (Dobbs, 2014). The threat of substitutes and new entrants also increases competition for the company which adversely affect its profitability. Thus, evaluations of these factors are crucial for companies because it provides them key market insights regarding their and other industry which assist them in increasing their profitability and diversifying their business by expanding into new markets.
In contrast to SWOT and Porter’s Five Forces model, PESTLE analysis is aimed at determining how six external forces affect the business of a company. These six forces include political, economic, social, technological, legal and environmental. This model is used by corporations to look at the factors which are taking place in the marketplace of the company or the countries in which it operates its business. This tool assists the corporation in examining how these factors affect the customers and their purchase choices. For instance, the senior level executives of a company can focus on social aspects of the customers of the company by using PESTLE framework which includes factors such as culture, buying patterns and demographics of customers (Ho, 2014). Similarly, the environment plays a crucial role in reaching a wider audience of customers because adverse weather conditions influence the ways customers view sustainability. Similarly, the legal environment also poses both threats and opportunities for corporations. For example, Brexit resulted in creates new challenges for EasyJet due to which the company has to shift its business in EU while its headquarters remain in the UK.
Internal and External Factors Affecting a Company’s Business and HR Functions
Each of these tools provides different information and market insights to the management of companies which are crucial for them while forming business policies. SWOT analysis focuses on evaluating the internal factors of the companies while PESTLE and Porter’s Five Forces model evaluates external factors which create challenges and opportunities for business (Rothaermel, 2015). Each tool plays a different role in providing crucial information to corporations which is significant for them to ensure that stay ahead of competitive by developing on the strong competencies of the company while building defences for addressing the challenges of the enterprise.
Technological innovations
The rapid changes in the technology and innovations resulted in effecting the business of organisations across the globe. Due to these technological changes, the requirement of technological personnel has increased because the requirement of technically skilled employees is necessary to ensure that it matches the changing job requirements (Kim, Kumar and Kumar, 2012). It affects the organisations’ business because they have to change their processes as per these technological advancements. Furthermore, it creates challenges for HR functions as well because they are responsible for ensuring that the company fulfils its talent requirements and polish the skills of its current workforce. It is also an internal factor which affects the functions of organisations and HR operations. Many times employees resist the adoption of new technology by the corporation because they have to learn new skills which influence the HR department allocates its time and resources (De Massis, Frattini and Lichtenthaler, 2013). The company has to spend resources on improving the technical skills of employees, and they also have to ensure that they did not resist the change.
Along with the change in organisations, the demands of employees change as well. In order to adopt the requirements of employees as per the changing work situation, it becomes relevant for corporations to adopt as per the demands of their employees (Bowen, 2016). Along with health and safety requirements, the employees have started demanding paid holidays, bonus, incentives, less working hours and other facilities in the workplace which creates challenges for employers.
The changes in the demographics of employees resulted in altering the business patterns of the corporations, and they are external factors which impact the business of companies. In the case of the United Kingdom, the increasing population of old people resulted in increasing issues because corporations have to provide them welfare benefits, medical supports, pension and other facilities (ONS, 2017). It also creates a demand for young talented workforce. The technological trends change the business functions of corporations, and they also influence the HR functions such as recruitment because HR managers use technological advancements to hire employees from all across the globe. Social factors create challenges for companies while operating their business and it increases the importance of compliance with social factors when the company is operating its business.
The Stages of Strategy Formulation and Implementation
It is an internal factor which influences the business and HR functions in organisations. Due to the rapid growth and expansion of corporations, the HR department in corporations is required to focus on recruitment of staff members (Nouri and Parker, 2013). Without a high level of growth opportunities, the attrition rate of employees increases in corporations which makes it difficult for HR managers to retain talented staff members for a long period.
While managing their business, the corporations have to comply with guidelines issued by the government strictly. The continuous changes in the legal framework resulted in increasing challenges for the HR department, and they are external factors which affect the corporations. Organisations operating their business in the United Kingdom and European Nations have to comply with policies implemented by the governments and the continuous changes in their legal framework affects their business practices as well. For instance, organisations have to face many difficulties due to “Brexit” which created legal dilemma for companies. EasyJet is a UK based airline company in which the majority of shareholders are EU based due to which it falls under the criteria of 50 percent EU owned company following Brexit. Due to the legal complexities, the company has to establish its operation in EU; however, the headquarters of the company is situated in the United Kingdom which costs £3 million to the company (Williams, 2017). Moreover, corporations are also required to comply with various legislations which are implemented by the government to protect the rights of employees. The examples of these laws include Minimum Wage Act, Trade Unions Act, Maternity Benefits Act, Workmen’s Compensation Act and others.
While forming and implementing the strategy, the vertical and horizontal integration model should be followed by corporations as per their requirements to ensure that the strategy reached a wider audience.
Following are different steps which are followed by corporations and the HR department for strategy formulation.
Firstly, corporations should focus on setting up long-term objectives while forming business strategies. The objective should focus on achieving the organisational goal and assisting the company in expanding its profitability (Bamberger, Meshoulam and Biron, 2014). The HR department assists in evaluating the number of staff members who will be hired to achieve the set objectives.
Without proper evaluation of the environment, it becomes impossible for the company to formulate an effective strategy. The environment should be evaluated based on the objectives which are set by the company. The HR managers evaluate the business environment to determine the scarcity of human capital and how this affects the recruitment and retention process in the business.
The Role of HR in Business Planning and Change Management
The corporation should set quantitative targets after evaluating the key forces which affect the set targets of the company. The quantitative targets should be compared with long-term customers’ requirements to ensure that it expand profitability of corporations (Bisbe and Malagueno, 2012). The HR department evaluates the talent requirements which will be necessary to achieve the set quantitative targets.
While forming the strategy, it should aim to facilitate each division in the organisation to ensure that the requirement of each subunit is fulfilled. The HR managers focus on evaluating the qualification requirements of employees in each division and formulate strategies to hire these employees.
The corporation is able to identify the gap between the planned or desired performance by conducting performance analysis. The HR manager critically evaluate the performance of employees to ensure that their performance is suitable to meet the needs of strategy goals
After evaluating all these factors and consulting with the HR department, the strategy is selected by the company.
Following are different steps which are essential for successful strategy implementation process.
The strategy implemented by the company should be evaluated and communicated with employees in the organisation to ensure that they are unable to understand the changes which the strategy will bring in their role (Bamberger, Meshoulam and Biron, 2014). The HR should be responsible for effectively communicating the strategy and resolving queries of employees.
The company should adopt an implementation structure to coordinate between different departments in the company. It assists the corporation in ensuring that the strategy is reached to each division in the corporation. Similarly, HR should contribute to the development of this structure to reach a wider audience.
Appropriate support policies should be implemented by the corporation to ensure that employees did not resist the change, and they did not get confused as well (Azhar et al., 2013). The HR should lead these programs and policies to resolve the issues faced by employees while implementing the policy.
All the functions of the organisation along with HR practices should be discharges as per the strategy to ensure its effective implementation.
Following are various key performance indicators (KPIs) which assist corporations in evaluating the performance of the business.
The key operational variable includes sales and profitability which is used by corporations to evaluate their performance. If the sales of the company are increased along with its profitability, then it indicates that the company has effectively implemented its strategy (Wu, 2012). The HR department plays a crucial role in this because along with growth in sales and profitability, the requirement of talented and skilled workforce increases as well. Thus, the HR department has to hire appropriate number of employees to supply the products and services of the company effectively.
The Different Indicators Used by Corporations to Evaluate Performance of Business
Customer satisfaction is a major indicator which highlights the success of the strategy implemented by the company. Effective customer satisfaction resulted in increasing the profitability of the company as well. The HR department plays a crucial role in this because without the support of employees, a company cannot satisfy its employees. For example, Apple provides support to its customers through its employees when they visit their stores which assist the company in maintaining a customer satisfaction rating of 93 percent (Casey, 2018).
If the strategy has resulted in improving the market performance of employees by increasing its market share and customer based, then it indicates that the success of the strategy. Without effective performance of employees, the market performance of a company cannot increase (Marr, 2012). For example, it the company did not have skilled workforce, then it is unable to fulfil the demand of a wider audience, thus, the HR plays a crucial role in ensuring that employees perform at their best while increasing the market performance of the company.
Following are different sources which can be used by corporations to collect business and contextual data which can be used for planning purpose.
The personal data of employees which is collected by the corporation is a key source of collecting contextual information on clients which assist the company in forming business strategies while considering the needs of employees (Jiang, Wang and Zhao, 2012). The HR department should evaluate this data to determine the employees who are from different cultures or backgrounds to implement policies for them to avoid discrimination in the workplace.
The company should conduct both offline and online survey which enable the HR department to collect relevant contextual data with employees that assist them in forming business strategies which target the needs of the organisation. The survey should be anonymous to ensure that employees are able to criticise the current practices of the company which assist the corporation in developing new policies as per their needs.
The corporation should collect contextual data from the competitors because they have access to similar resources. It also assists the corporation in building its own capabilities to ensure that it provides effective competition to them (Upson et al., 2012). It also assists the company in collecting market insights and future trends which become a key part of the strategy of the corporation. It enables the company to build HR practices ensuring that it is able to fulfil its demand of talented workforce.
The Various Sources Used to Assess and Utilize the Planning Process
The corporation should interview with professionals in the field to collect contextual data which assist the company in forming business strategies. The company can also interview with HR professionals to learn about the key skills which employees need to polish their skills.
Conclusion
In conclusion, there are various factors which influence the HR agenda such as talented management, employee engagement, culture and process management. The corporations can use different tools such as SWOT, PESTLE and Porter’s five forces model to evaluate the business environment to collect both internal and external insights. There various external and internal factors which affect the organisation and HR functions such as demographic, social, technological factors, legal changes, level of growth and others. While forming and implementing business strategy, the company should comply with an appropriate framework to ensure its effectiveness. Various KPIs can assist corporations in determining the performance of the business which includes sales, profitability, customer satisfaction and others. Various sources to collect contextual data is analysed in the report as well which include survey, employee data, interview and others.
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