This study examines the factors impacting changes in the global environment of Company A which is a Chemical Production Organization and their HR strategies, policies and practices.
Company A was established in 1986, this company produces chemical cleaning and maintenance products for the domestic, commercial, institutional and industrial Market. Its main product is Liquid Chlorine Bleach which is chemically known as sodium Hypochlorite. In 1995, the business expanded its production from bleach to 20 other products which includes Dishwashing liquid, fabric softener, Hand soaps, battery water and much more. The vision of the company A is to expand its services throughout the Caribbean islands.
The global environment is dependent on internal and external factors which affects how an organization operates. External factors which impact change in the global environment are as follows; Political, economic, social, technological, environmental, and legal factors. Equally the internal factors that impact changes in the global environment of an organization include strength of the employee, Leadership, strategic risk, innovation and organizational structure.
1.1 External Environmental Factors
1.1.1 Technological Factors
Technological factors have to do with influences which have an impact on how an organization operates in relations to the equipment used within the organization’s environment.
Technology helps businesses gain competitive advantages and is a major driver of globalization. Firms must consider if the use of technology will allow the firm to manufacture products and services at a lower cost while designing business strategies. It has become easier for companies to communicate with their customers in any part of the world and select new modes of distribution with the help of technology. It also affects the way HR departments contact employees, recruit employees, store files and analyze employee performance.
Human Resource departments can now reach audience effectively and efficiently by using social networks like LinkedIn and pre employment screening test which helps in the evaluation of an applicant’s skills with a view of selecting the right candidate for the job. The Human Resource Department of Company A recruits through online networking as this gives them much more flexibility with regards to controlling posts and applications that they receive. For instance if you would like to edit a post in a newspaper, HR would mostly likely have to pay for a new advertisement whereas with online post, most platforms allows you to edit the post and remove it whenever and however you wish.
1.1.2 Economic Factors
Economic factors need to be taken into account when determining the current and expected future value of a business these include factors such as labor cost, interest rate, government policies, taxes and management.
Changes in the economy directly or indirectly affect human resource activities of firms, in terms of recruitment, compensation and salaries. In order for an organization to prepare against economic condition is to know what’s happening in the world and around you and create a plan for when there is economic downturn.
Human resource strategies and policies such as recruitment, redundancy implications, compensation and salaries are being impacted, depending on the economic status recruitment could experience rise and decline and redundancy implications face the same impact, compensation and salaries would also depend on economic status because it would determine how high or low compensations and salaries will be.
1.1.3 Social Factors
Businesses must utilize and adapt to their external social environment in order to survive and must be aware of society’s preferences regarding their needs and wants. These preferences are influenced by a population’s values, beliefs and practices.
Social change brings risk for example if a business refuses to adapt to changing social preferences it can lead to failure. Organizations try to influence social values by using marketing and targeted public relation strategies. Company A uses marketing strategies such as advertising their products through magazines and online.
1.1.4 Political Factors
Political factors are activities related to government policies, regulations and its administrative practices. Some political factors affecting organizations are tariffs, health and safety law, trade control and employment laws. These factors can cause effects such as impact on the economy, changes in regulation and political stability.
Tax laws controls how a business reports its financial status to the government. For example it is required that company A submit their tax returns for cooperation three months after the financial year has ended to the Inland Revenue Department. Profits that accrue directly or indirectly to a non resident company carrying on a business through a permanent establishment in St.Lucia are subject to corporation tax at 33.3%
1.1.5 Legal Factors
These are factors regarding how the law affects business operations and customer’s behavior. A few examples of legal factors affecting businesses are consumer laws, healthy and safety laws and employment laws.
Health and safety laws aim to prevent workplace accidents, injuries and diseases, and outline consequences for breaches of health and safety standards. Human Resource should implement policies and practices in the workplace in order to protect the health and safety of their employees.
Company A ensures that all Lab workers wear ear protection, eye protection and lab coats whenever they are in the lab. They also ensure that workers are aware of the safety procedures.
1.1.6 Environmental factors
There are several environmental issues affecting organizations such as industrial waste, sustainable development of raw materials and Emissions. These issues affect organizations because laws require business to change equipment and procedures to meet imposed standards which cost organizations money. Businesses undertake stricter changes in an effort to preserve the environment and ‘do what’s right’.
The use of harmful substances from organizations can cause pollutions if they are not dealt with correctly. Human resource managers must act in accordance with any restrictions when manufacturing or using chemicals or chemical products containing harmful substances. The use of harmful substances efficiently can help reduce waste and minimize cost.
1.2 Internal Factors
1.2.1 Strength of the Employees
Identify whether employees are motivated, hard working and talented as they produce better results compared to unmotivated and less talented workforce. The processes and relationship within departments can also improve effectiveness and efficiency.
The internal factors include the inner strength which has a favorable impact on a firm and weakness which has a harmful effect on the firm. In order to enhance employee strength managers place them in positions where they are able to use their skills and succeed for example, in company A employees who are good at relevant technical knowledge are placed in the production department.
Company A has an appraisal system every month where performance of employees in the workplace is evaluated. This allows management to be aware of employees who display good or bad performances, therefore enabling management to reward employees who have performed well.
Leadership is an important function of management that helps maximize efficiency and achieve business goals. Strong leadership within an organization helps maximize productivity and achieve goals, whereas fragile leadership hurts productivity and puts the health of an organization in danger.
Managers can utilize several leadership styles to direct their employees including autocratic, bureaucratic, laissez-faire, charismatic, democratic, participative, transactional and transformational leadership style.
Learning and development is one of the systems that Human resource professionals can use to support good leadership in their organization. Other policies and processes such as organizational development, job design and employee engagement are used to emphasize good leadership.
1.2.3 Strategic Risk
These affect a firm’s ability to reach the goals in the business plans and could be due to the impacts of changes in technological evolutions or customer demand. These factors could pose as threats as they can change how customers perceive your products. Based on these, customers might think a product is overpriced and outdated.
Strategic Risk Management is a process performed by management for identifying, assessing and managing risk and uncertainties, affected by internal and external events, scenarios and risk that could hinder the organization’s ability its strategies and strategic goals.
Innovation is the process of translating an idea or invention into a good or service that creates value for which customers will pay.
Businesses need innovation in order to keep up with competitors because it is important to get one step ahead, improved productivity and reduced cost. Innovation could come in the form of marketing and also through promotional initiatives in the marketing plan, staff training and welfare. Inability to improve your products or services may leave your business unable to compete and diversify. Businesses that fail to innovate run the risk of losing market share to competitors, losing key staff and reduce margin and efficiency. This way HR strategies and policies such as hiring, training and development and work place diversity would be impacted through the implementation of innovation within an organization.
1.2.5 Structure of Organization
Organizational structure determines how the roles, power and responsibilities are assigned, controlled and coordinated and how information flows between the different levels of management.
A firm’s strategy is important in determining HR practices and with an increase in global competition and highly changing business environment HR practices are becoming flexible and integrated. The four general types of organizational structure are functional, divisional, matrix and flat structure.
Company A has a functional Organization structure, this is a structure where people who do similar tasks are grouped together based on specialty. For instance in Company A production assistant and production workers are place in the production department.
1.3 PESTLE ANALYSIS
Political • They go according to government rules and regulations
• Tax laws – File annual Tax returns
• Unemployment rate 2017 ( 21.5%
• Growth of St.Lucia economy
Social • Consumer attitude –most consumers are not price sensitive but are quality sensitive. Company A key focus will be on product quality rather than price.
• Company A mainly advertises its products online and are able to edit their post
• Information can be transferred rapidly due to the use of mobile phones and internet.
• Recycling and waste management
• Must obey Health and Safety Laws
• Must Obey Employment Laws
1.4 Changing Nature of HRM in response to environmental forces.
The business world is constantly evolving and changing, not only to changing social and political environments, but also to the impact of technological innovation. Human Resource Management functions have broadened, to include managing organization capabilities, relationships, learning and knowledge. These functions include four generic areas including roles, relationships, strategic focus and learning focus.
Human Resource Managers need to understand the changing nature of the work and workers. Flexibility in the workplace is regarded as a vital aspect of modern organizations. Due to the constant changes in the corporate world, organizations that require flexibility among their working environment are at a high risk of failure. Work patterns have been structured around Atkinson’s model of flexible firm. This identifies four types of flexibilities that a firm seeks which are functional, numerical, distancing strategies, financial.
These flexibilities have a sense through a division of employees into core and peripheral workforce. The core group consists of high skilled and high pay workers expected to deliver functional flexibility. They will have careers and enhance work prospect and the possibility to participate to training and development courses. A peripheral workforce includes employees that are not only temporary or do not contribute to the most essential task the business requires. Having a good core workforce helps in creating stability within the workforce itself which allows managers to make some basic predictions about how operations will progress and how much they will cost.
Company A Human Resource Department implemented suggestions boxes in each sector of the business in order to enhance relationship between the employer and employee. This method allows for direct criticism of policies by Human Resource Management.
1.5 Strategies for aligning business and HR prospective
Strategic Human Resource Management as stated by Pearce and Robinson (2007:3) is described as the set of decisions and actions that result in the formulation and implementation of plans aimed to achieve an organization’s visions, missions ,strategy and strategic objectives within the business environment in which it functions
In order to form strategies, companies need to make an analysis of the organization’s external and internal environment. A company can determine and form their strategy based on this analysis thereby creating strategic human resource planning. Strategic Human Resource planning is based on strong working relationships between Human resource department and line managers. Succession planning is vital in the strategic alignment of human resource planning because it ensures that employees are constantly developed to fill each needed role.
2.1 Strategic contexts and terminology
1. Strategic Planning :
This is the process of envisioning a desired future, and translating this vision into broadly defined goals and objectives and a sequence of steps to achieve them.
2. Planned Emergent Strategies :
Emergent strategy is the process of identifying unexpected outcomes from the execution of corporate strategy and learning to integrate those unexpected outcomes into future corporate plans
3. Vertical Integration :
Vertical integration is the combination of different stages of production or distribution of a company within the same industry. Backward integration is when a company acquires its input supplier whereas forward integration is when a company acquires its distribution chain.
4. Horizontal Integration :
Horizontal Integration is the combination of companies that are at the same stage of production in the same or different industry. When products of both companies are similar it becomes a merger of competitors.
Scenario Planning :
This is the process of visualizing what future condition or events are credible and what their consequences would be like and how to benefit from them.
5. Organization Goals
Organizational Goals are strategic objectives, purpose and missions of a business that are established by its management and communicated to its employees. Some examples of organizational goals are profitability and growth.
2.1.2 Stakeholder Analysis
Stakeholders/Stakeholder Group Strengths Weakness Threats Opportunities
Customers Customers satisfaction increases sales Poor customer service can low sales Lower sale and profits Increasing demand of products
Government Regulations and Rules ensures that the safety and effectiveness of products to maintain consumer confidence Companies incur greater expenses to stay in agreement with existing regulations Environmental protection standards – whenever the government regulations are updated, company A needs to develop technical and economically feasible recycling solutions that meet their standards Strict environmental laws and registration procedures, new companies have strong entry procedures
Employees Committed employees improve quality of work output
. Tardiness and poor comprehension of materials Employees access their social media on the office devices which can cause malware to disguise itself in links Frequent promotion within every department of the organization from production staff to office staff
Trade unions Establish teamwork and strong loyalty Pushes for higher wages and better benefits which is costly to the company Unions gain higher wages for their members while other member’s wages remains unchanged resulting in disputes.
Workers are able to negotiate wages, health, safety issues, benefits and working conditions with management.
2.1.3 Environmental Audit
Environmental audits come in three main types which are environmental compliance audits, environmental management audits and functional environmental audits. Environmental compliance audits evaluate a company’s environmental performance and environmental management practices against legal and other requirements. Environmental management audits are audits to verify if an organization meets its objectives.
An environmental compliance audit was conducted for company A on the basis of health and safety policies and practices which can be found in the appendix. This audit showed that company A’s environmental performance and management practices were relatively fair. Although in some aspects the company could have been stricter to enforce some of the requirements that were not being followed.
2.1.4 Role of Human Resource Professionals in strategic planning
Human Resource professionals are in a distinctive position to supply competitive intelligence that may be valuable in strategy formulation. Details regarding advanced incentive plans used by competitors, opinion survey data from employees and information about pending legislations like labor laws. Human Resource contribute in the strategy formulation process by supplying information regarding the company’s strength and weakness which has a determining outcome on the company’s viability of the firm’s strategic options.
Human Resource plays an essential role in the successful execution or implementation of a company’s strategic plan. Human Resource is involved in the execution of most firms downsizing and restructuring strategies, through outplacing employees, instituting pay for performance plans, reducing health care cost and retaining employment.
2.1.5 Range of organizational contexts
Private Organization – business firm in the private sector of an economy is controlled and operated by private individuals who are not civil servants or government employees. The culture in which private organizations display is one that focuses on achieving organizational goals and results by taking necessary actions to appease their customers.
Public Organization – business firms in the public sector of an economy is controlled and operated by civil servants or government personnel. Three organizational structures in a public sector include divisional, horizontal and vertical structures.
Voluntary Organization – it relies on occasional or regular volunteers for its operations which may or may not have paid staff. A charity is an example of a voluntary organization which consists of coordinators, beneficiaries, volunteers, regulators and funders.
2.1.6 The role of the HR function in organizational contexts in achieving set goals and objectives
Human Resource Management function in a public and private sector aims to:
• Ensure the equal employment opportunity
• Create and Execute Human Resource compliance
• Control employee’s performances with internal audit
• Manage activities and resources on time with the budget provided.
• Exercise power and influence, above all during transitions or hard times such as changing of management or major layoffs.
Human Resource Management practice in a voluntary organization includes:
• Recruitment and Selection
• Health and Safety
• Policies and procedures
• Training and development
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