Business Issues and Contexts of Human Resources
Introduction
Over the years, organizations have adopted various approaches that determine their strategies to meet objectives. Further, the approaches are essential in determining and characterizing management functions in an organization. Human resources are central to the success of an organization. Such is attributed to the fact that business and management functions revolve around them. More so, an organization’s human resource is responsible for making decisions in line with the overall objectives. In this paper, business issues and contexts of human resources are discussed. Both internal and external factors that have an impact on human resources are also analyzed. Moreover, the discussion highlights human resource practices, business planning, response to change, ethics, and accountability. It is essential to evaluate and understand business issues and contexts as they allow human resources to make informed decisions.
Factors Affecting an Organization’s Business and HR Function
Internal Factors
One of the internal factors that affect an organization’s business and HR function is communication. As Armstrong (2020) highlights, communication involves the exchange of ideas and information. Indeed, communication between the employees and management is essential for the success of an organization. As such, the methods and channels of communication utilized should be effective. Armstrong (2020) advocates for a two-way communication process. In such an approach, there is an upward and downward movement of information. In turn, the employees become participants in the communication. Therefore, they can provide their inputs and ideas. Ultimately, employee participation in communication enhances commitment to organizational goals and objectives. More so, the participation reduces reluctance from the employees primarily when initiating changes within the organization. Through communication, both employees and HR work towards achieving common goals, which is crucial for business success.
On the other hand, the lack of communication could lead to adverse impacts that hurt business operations. For instance, the breakdown of a communication channel could be disastrous in that information could be distorted. In turn, employees fail to receive the required information, leading to delays in meeting objectives. As Armstrong (2020) notes, HR should always ensure a clear set of objectives, strategies, and timelines that are communicated continuously. More so, the selection of communication methods should depend on the type of information being relayed. Although individual face-to-face- communication is commonly used, Armstrong (2020) argues that accuracy is dependent on the manager’s skills. When the subject matter is crucial, a variety of communication methods should be combined to promote the quality and acceptability of the information.
Stakeholders are an essential factor that affects business operations as well as HR functions. Indeed, the primary objective of HR functions is to meet the needs and requirements of stakeholders (Armstrong, 2020). As such, the stakeholders of an organization determine the operations that the organization should be involved in. More so, they are central to providing inputs regarding major changes being implemented within the workplace. Given that the stakeholders are influential in all decisions, they affect and determine the time taken to implement approaches selected. In cases where there is a significant number of stakeholders, it takes longer to select the best approach. Such is attributed to the rule of participation as all the stakeholders have to provide their inputs. Overall, the HR functions should always consider meeting the needs of internal stakeholders. They are inclusive of shareholders, employees, and management. In turn, the quality of HR functions regarding stakeholders’ influence achievement of the overall goals. As such, stakeholders should always be considered as they have significant influences.
External Factors
Globalization has become the most significant external factor that affects an organization’s business as well as HR functions. As Armstrong (2020) explains, globalization has led to the development of an international market of goods and services. As such, organizations are now interested in venturing into different markets globally. Overall, business operations in most companies extend beyond the national boundaries. Further, the concept of globalization has introduced different practices aimed at enhancing the efficiency of business operations. First, globalization has led to the formation of trading blocks like the European Union (EU) and the North America Free Trade Area (NAFTA). Within these trading blocks, different policies characterize business operations and requirements for organizations. For instance, member countries are exempted from trade tariffs, export fees, and import quotas, within the trading blocks. In turn, organizations take it as an opportunity to expand their operations and benefit from the policies.
On the other hand, globalization promotes competition from organizations. As such, HR functions have to be streamlined with strategies that increase competitive advantage for an organization. Armstrong (2020) argues that creating a competitive advantage depends on the capabilities and resources that characterize an organization. More so, the uniqueness of the resources and capabilities further determines whether organizations can withstand competition. As such, HR functions become valuable in attracting the best talents to work in an organization. Further, exploiting organizational resources to produce quality services and products is essential. Ultimately, globalization will continue to influence organizational and HR functions as policies and alliances are constantly being established.
Government policy, which is a political factor does affect organizations and has an impact on HR functions. First, political stability is a crucial element of organizational operations. Indeed, political stability is one of the factors that organizations have to consider before venturing into new markets. When there is political instability, fluctuations are likely to occur, affecting the revenues generated for organizations. Moreover, instability creates an environment that is not conducive to business activities. For instance, employees’ safety is compromised by political instability. In turn, HR is reluctant to risk the lives of employees. Therefore, business operations have to be suspended until there is stability.
Further, in line with the rising environmental concern, government policies affect HR functions and business operations. Over the years, there has been increased awareness of the need for caring for environmental resources. As such, various government agencies and international organizations have developed policies and guidelines that should be followed. For instance, environmental pollution is prohibited. Therefore, organizations are required to ensure that their operations do not contribute to pollution. Further, corporate social responsibility (CSR) has become an essential factor in organizations. As such, HR functions must align with the best approaches that help to contribute to CSR. Indeed, the planet is one of the triple bottom lines essential for organizational success. More so, participation in CSR activities is beneficial for organizations as it promotes the brand’s growth. In turn, the competitive advantage is increased. Overall, adherence to the established environmental policies determines the influence on HR functions. Considering the external factors that influence an organization is also crucial to allow planning and allow HR to make informed decisions.
Organizational and HR Strategies and Practices
Models
David Ulrich’s HR function delivery model is considered the most influential force for shaping the HR agenda (Armstrong, 2020). Ulrich argued that HR functions in businesses should be organized into four components. The first component is the HR business partner (HRBP). HRBP develops a strategic partnership and relations with internal clients of an organization. As such, the HRBP is responsible for human resources and also advertises services in an organization (HRM Advice, 2011). More so, HRBP identifies and recruits top talents to influence an organization positively. Talent development is also a continuous process to ensure that there are skilled individuals when there are open vacancies in an organization. The second component in Ulrich’s model is the change agent. As such, HR should actively participate in the change management teams. In turn, they communicate changes to the employees at the early stages. Moreover, employees are prepared for new roles that characterize the changes implemented. Such includes planning for training programs to enable employees to develop required skills.
The third component in the model is administration expert. Armstrong (2020) explains that it is a transactional role and that HR has to have knowledge regarding labor laws. In turn, HR develops and oversees the implementation of regulations that promote a conducive work environment. Such is concerned with the promotion of safety to prevent workplace accidents and injuries. More so, the role applies to the keeping of personal data for the employees. Technology helps in eliminating the manual data of the records. The fourth component of the model is the employee advocate. Indeed, HR should act as a representative of the employees and champion their interests (HRM Advice, 2011). In executing this role, internal surveys should be regular as they help identify existing gaps. Further, HR is responsible for developing procedures that allow the management of complaints from employees. Overall, when Ulrich’s model is applied in an organization, it assists in shaping the HR agenda.
Strategy
HR utilizes different strategies at the organizational level. One is the best-fit approach. The approach is considered as an integration of HR strategies and an organization’s business. The approach argues that HR’s effectiveness depends on how well it serves an organization in all stages of development (Armstrong, 2020). As such, HR practices and programs should change as needed to ensure they match the changes that occur in the organizational life cycle. Further, innovation and quality should be maintained in all stages as it determines an organization’s competitiveness. The best fit approach also states that organizations could be successful and effective if they adopt a strategic configuration.
The best practice approach is common in an organization. The central theory of this approach is that HR practices are best for situations (Armstrong, 2020). As such, it is argued that adopting the set practices translates to improved performance for the organization. Some of the practices are inclusive of selective hiring, continuous training, communication, and self-managed teams. Indeed, the practices realize a variety of benefits for the HR and organization. Nonetheless, the approach is critiqued, with people arguing that the practices can not be applied in all situations.
The third approach is the resource-based view (RBV). Armstrong (2020) notes that RBV is concerned with establishing organizations that are flexible and intelligent. In turn, it provides a competitive advantage over the competitors. One way of achieving the competitive advantage is by HR ensuring that talent development and recruitment are continuous. Further, the development of skills among the employees to match the current requirements should always be considered. RBV is also concerned in ensuring that an organization’s products and services are unique and of high quality. In turn, it is difficult for competitors to imitate the products. Overall, using this approach enhances success in the market and adds value to new products’ development.
Business Analysis Tools
PESTLE analysis tool evaluates the political, economic, social, technological, legal, and environmental aspects that characterize and influence an organization. The political factors help identify the level of government influence on the economy or a particular sector. Such is inclusive of policies and taxes imposed. The economic factors evaluate economic performance. For social factors, they highlight the trends and demographics of a population. The technological factors are related to innovations that characterize the industry. Legal factors are involved with established laws and guidelines. For the environment factors, analysis helps characterize the surrounding business environment. Overall, the PESTLE analysis allows the management to make informed decisions regarding markets and future expansion plans.
Porter’s five forces tool is crucial in evaluating the structure of a particular industry or sector. All the forces in the tool are external. The forces include industry competition, a new entry, supplier’s power, buyer’s power, and threat of substitutes (Mindtools, 2019). Generally, the model aims at evaluating the factors that could affect business operations. When HR and managers utilize the tool, they can develop a competitive advantage (Mindtools, 2019). More so, findings from the analysis help to predict performance and strong markets. As such, an organization avoids making mistakes that could affect its business operations. Ultimately, the analysis could help an organization to initiate changes that help boost revenues.
References
Armstrong, M, T. S., 2020. Armstrong’s Handbook of Human Resource Management Practice. 15th ed. London: Kogan Page
Armstrong, M, T. S., 2020. The Best Fit Approach. In: Armstrong’s Handbook of Human Resource Management Practice. London: Kogan Page, p. 30
CIPD, 2020. PESTLE Analysis. [Online]
Available at: https://www.cipd.co.uk/knowledge/strategy/organisational-development/pestle-analysis-factsheet
[Accessed 31 07 2020].
HRM Advice, 2011. Ulrichs HR Roles Model. [Online]
Available at: https://hrmadvice.com/hrmadvice/hr-role/ulrichs-hr-roles-model.html
[Accessed 31 07 2020]
Mindtools, 2019. Porter’s 5 Forces: Understanding Competitive Forces to Maximise Profitability. [Online]
Available at: https://www.mindtools.com/pages/article/newTMC_08.htm
[Accessed 31 07 2020]