Steeple is a framework that can be used to measure the 2 way relationship between an organization and the external environment. Through each factor, there will be impacts the internal environment must face. The framework has been broken down into two segments; outer orbit and inner orbit. The Outer orbit consists of Political, Economy and Legal whilst the inner orbit includes social, ethical and environment. Technology and Globalization have both been linked together. This essay firstly aims to understand the framework. Secondly, Pest will be touched upon. Finally, the Steeple framework will be assessed.
Steeple is a framework used to identify the potential impacts from the external environment. They will be able to categories the issues they are facing and plan out the appropriate strategies to overcome. If certain factors are foreseeable, it will provide them opportunity and time to plan in advance. However, a disadvantage of using this is that managers may get caught up on the categories resulting in them losing the bigger picture. As discussed in this essay, there is overlapping as that is the nature of this framework. Pest is another framework, which stands for : Political, Economical, Social and Technological. However this was not used in this essay as it does not go into as much depth as steeple.
Political issues have a direct influence on the organization, especially on the ways work is performed ( Foot and Hook 2011) Government changes can play a big role as they may change their regulations/policies, therefore the organization will also have to adapt. This will especially become a risk when there is international movement. As the political stability of countries will be different (Contributor 2015) human resources management will need to have strategies in place to face the financial and economic challenges. Political changes can also have an impact on the economy as there may be an increase in tax (Contributor 2015) undoubtedly causing employees within the internal environment to pay out more from their income. Human resource management should give importance to team building and good practice despite the difficulties as the collective hard work will strengthen the organization ( Foot and Hook 2011) Managers will play a key role in managing and motivating employees as just because changes happening, it does not mean the quality of work diminishes ( Foot and Hook 2011)
A strong economy can have a prosperous effect however a poor economy can invite struggles. With a weak economy there will be an increase in unemployment, little supply of goods/services and an increase in personal tax (Carbery and Ross 2013). An increase in tax will result in employees paying out more from their wages which will in turn reduce consumer spending (Carbery and Ross 2013). Organization from different industries will be affected from this as they will not be generating as much profit as anticipated. When an economy begins to decline, it will affect the human resource management as managers within will need to make effective decisions and strategies to handle the negative impacts of economic downfall. Managers are the leaders of the business. They will have to adapt to the new changes (Mackay 2006) through their leadership skills. There should be an \’added value\’ (Foot and Hook 2011) within internal environment which is a concept used encourage individuals to push through the difficult times. During times like this, there may be a decrease in work performance from employees. There could be frustration and anger within the environment, especially if there are chances of people being made redundant. There should be an effective dealing of grievances in place so that employees can be heard and taken care of appropriately.
However, the organization can also be impactful. When there is a struggle in the economy, organizations may decide to downsize (Gilmore and Williams 2013). The unfortunate side effect is that there will job losses contributing towards the unemployment rate. This will impact the labor market (Foot and Hook 2011) as there may be a high demand of vacancies though organizations are not able to proceed through to recruitment and selection. To conclude, the economy and organization have a 2 way relationship since the economy is monitored to prepare the managers to implement effective strategies when they counteract problems however they have the power to take decisions to let people go which will inevitably increase the unemployment rates in the external environment.
With the presence of law, organizations have the guidelines to operate in the appropriate manner. Following what has been laid out will not only protect their reputation rather will also prevent them from having to face any discipline ( Gilmore and Williams 2013) Employment law places responsibility on employers to make sure they are recruiting and selecting employees according to the law. Legislations will impact human resources as it will directly put the health and safety of individuals in the hands of the organization. An example of this would be The Health and Safety at Work Act 197 (Foot and Hook 2011). This places a duty of care upon the employers, however, also explains the responsibility of employees upon themselves.
The development of society outside the organization is constantly changing. Factors that occur outside the business are elements that managers do not necessarily have control over. Society relates to the various lifestyles, behaviors, trends and also an ageing population. An ageing population will impact organizations as the demand for goods/services for the elderly will increase (Gilmore and Williams 2013). Human resource management will be impacted through this as they may have to consider retraining employees who are of an elderly age. The culture is known as the beliefs, conduct and morals of the business (Gilmore and Williams 2013) the relationship between culture and performance of employees (Thornhill et al. 2000) is linked as the right culture can encourage employees to excel, offering a competitive edge (Thornhill et al. 2000). The external environment of society impacts human resource management as they should strive to enforce a reward scheme to motivate and appreciate their employees (Foot and Hook 2011) as every individual is unique in their own way, policies/procedures regarding fair treatment must be developed and adopted within the work force. Knowledge management should also be a focus area when managing employees to retain their knowledge.
However, social trends may challenge this aspect of the organization if employees are made to feel unvalued. This may cause subculture to appear within the internal environment (Thornhill et al.2000) which can lead to an ineffective work force as well as a decrease in employee performance.
On the other hand, organizations too have a social responsibility; the term used to describe how organizations should consider the well being of society (Beesley and Evans 1978) Decisions made from within the internal environment in regards to their activities can have an impact on the local community (Beesley and Evans 1978). The activities, for example expanding the infrastructure, will have an affect on the local people who live around the area as it may result in prolonged period of road work. In this particular scenario, it should be ensured that the provision of contracts is performed out correctly. To conclude, there is a 2 way relationship between the organization and external environment as each can impact the other from the development of society but also in regards to how the organization can affect people in society.
Environment is the outside surrounding and the effect it has on all living things (Krishnamoorthy 2015). The environment is a factor that the organization cannot physically control, proving to be a challenge for organization. The climate (Carbery and Cross 2013) plays a big role. If produce is grown outside the quality of it will be important in regards to whether it can be sold or not. Natural disasters, big or small, will inevitably have an impact too. In situations like this, managers would need to be aware of the health and safety policies. Line managers could formulate team meetings for employees (Foot and Hook 2011) to educate them and share information about the environment.
Sustainability is the process that meets the rights of those who are living in the current without risking the potential of those in the future to accommodate their own rights (Young and Dhanda 2013). In terms of environmental sustainability, it can be understood, that it is keeping in the mind the natural word that surrounds us. This would impact human resource management as managers would need to change the way their business operates if it is not environmentally friendly.
On the contrary the organization can also impact the environment. The organization may not have an effective waste management (Krishnamoorthy 2015) system which will lead to an increase in pollution. Depending on what industry the organization is in, there may be a high usage in technology. These may not be friendly to the environment, resulting in the release of dangerous gases into the air (Krishnamoorthy 2015) this will not only harm individuals but also all living organisms. Industries that are involved in heavy agriculture will entail the usage of chemicals and pesticides (Krishnamoorthy 2015). If these are not used in moderation the impact will unfortunately ruin the quality of the soil. To tie in, the environment can negatively impact the organization by natural problems that are not controllable however, the organization may send out problems into the environment by being heedless about the consequences of their activities.
Ethical relates to the morals and values that we hold. An impact could be that when the organization decides to move into third world countries, there may be ethical issue about the employees producing the goods although being paid very little money (Foot and Hook 11). This would affect the organization as it would go against their values, especially when they then sell these items for a higher price.
Corporate social responsibility is when the organization considers all elements, from an ethical perspective whilst also keeping in mind the social, economy, environment and rights of individuals (Foot and Hook 2011). The impact it could have on human resource management is that they can provide learning programs and goals to secure change (Foot and Hook 2011). An impact from CSR can also be when organizations decide to include this in their branding strategy (Foot and Hook 2011). This will attract the appropriate labor market whilst also promoting the organization.
However, there can be negative side effects of this, by the misuse of corporate social responsibility. When an organization is given power, there is a chance that may not be handled effectively (Beesley and Evans 1978). The significance of misusing power is big as the organization can consume an unfair amount of benefits from society. Unhealthy relationships can also form between the organization and their customers/suppliers (Beesley and Evans 1978). This will not only expose the corruptness within the business but also taint their reputation as an unethical organization. The organization can also impact the local community (Beesley and Evans 1978) based on the decisions that they take. The interest of society may not always be at the forefront of the organization, rather how much profit they can generate (Beesley and Evans 1978).
Technology and Globalization correspond with each other when it comes to the external environment. Organizations with similar products will be in competition with each other (How businesses are affected by competition competitive advantage business studies and business English 1995) there are various different ways that they can differentiate themselves from each other however one aspect is technology which makes certain businesses more attractive than others. This ties in with globalization since with the aid from technology the organization can then expand itself into the international market (Gilmore and Williams 2013). With technology, globalization can then be attainable (Perkins 1999) this will impact the organization as it may be a financial constraint to purchase these equipmentâ€™s. To be able to use technology effectively, employees will have to be trained to prevent skills shortage (Foot and Hook 2011). This may be a time consuming process. Furthermore, new competitors may enter the product market with modern technology therefore they will also have to consider investing. The decision to move international also involves gaining knowledge about the different cultures of organizations, their languages and different legislations. What may be common to one person may also be foreign to another. It will be the responsibility of the organization to practice international HRM as well as knowledge management (Foot and Hook 2011). Globalization can have a positive impact as it can offer a lot of opportunities. This can increase employee participation and motivation as there will be a variety of chances to develop their skills in various aspects of the business. However, globalization can increase the pressure therefore making it vital for the managers of the business to implement strong strategies in place so that it is a smooth transition.
On the contrary, with the increase of modern technology, it can negatively impact people in who society who may be seen as not required by the organization as essentially, technology has taken their place. When it comes to recruitment and selection process, there may be a lot of competition between potential employees as managers may be looking for individuals who have the technological flare. This may result in lots of unemployed people. To summariesâ€™, there is a 2 way relationship as without competition, there would-be a lack of desire to invest in technology whilst also with technology in the organization; it can affect the level of skills employees gain.
The organization and external environment have a 2 way relationship. The impacts from the outside, whether it is positive or negative, will not change the fact that the organization too can have an affect on the external environment. Within the business, with the aid from human resource management, employees can be well looked after and trained by their managers as well as the effective strategies in place.
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