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Essay: Business and contextual factors impacting on the British Army/HR issues

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1. Introduction

This report is based on an investigation conducted on the business and contextual factors impacting on the British Army and the HR issues within it. Internal and External sources of data have been used to create this report to indicate how the organisation should respond to the contexts in short term. Learning outcomes 1, 2 and 5 will be covered throughout this report using evidence, research, various models and cited references.

2. Learning Outcome 1

This must meet the Assessment Criteria’s 1.1, 1.2 & 1.3 based on contemporary business issues affecting HR function within the private, public and third sector organisation.

2.1 Types of organisations & the roles of management in them.

The three main organisations that exist in the UK today are the private, public and voluntary or third sector organisations. These are described in more detail below:

The private sector – is made up of industrial and commercial companies that have developed to react to stable and shifting demands of the market. Each company exists to make a profit and is owned by shareholders, who are the main beneficiaries and not the government. Stakeholders are the ones who decide who the members of the board of directors are. These directors are experts in their field and are responsible for the formulation and implementation of all policies (Leatherbarrow et al 2010). The private sector employs workers through individual business owners, or other nongovernment agencies, jobs include those in financial services, newspapers, hospitality or other nongovernment positions. Private-sector workers tend to have more pay increases, more career choices, greater opportunities for promotions, less job security and less-comprehensive benefit plans than public-sector workers. Working in a more competitive marketplace often means longer hours in a more demanding environment than working for the government.

Public Sector – organisations are owned and controlled by the government (or local government). They aim to provide public services, regularly free at the point of delivery for example, government departments and local authorities provide us with essential services, examples of the are illustrated below:

There are particular goods, called ‘merit goods’ and ‘public goods’ which can cause problems for the private sector, and so they are often better provided by the public sector.

Voluntary or third sector – These are usually social enterprises with primary social objectives. These types of organisations receive funding in the form of donations, public sector bodies or public funds. Motivated by selfless interests rather than commercial though profits are reinvested into the business, hence they have some sort of business mindedness (Martin et al 2009).

Management roles within these sectors are accountable for the organisational performance (this depends on both efficiency and effectiveness) however, organisational effectiveness depends on having the best suited individuals in the right jobs at the right time in order to meet increased changes with regards to the organisational requirements. This is where the role of HR function comes into play with HR Management. Bratton, J. and Gold, J. (2003) defined HR Management as

“A strategic approach to managing employment relations which emphasizes that leveraging people’s capabilities is critical to achieving sustainable competitive advantage, this being achieved through a distinctive set of integrated employment policies, programmes and practices.”

2.2. HR delivery and the main functional areas of management

This definition by Bratton, J. and Gold, J. (2003) clearly indicates that HR management should not only handle recruitment, pay, and administration, but also should capitalize on an organisation\’s HR in a more strategic level. To describe what the HR management does in the organisation, Ulrich, D. & Brockbank, W. (2005) outlined some of the HR management roles such as:

• employee advocate
• human capital developer
• functional expert
• strategic partner
• HR leader.

Any HR manager that works within the afore mentioned organisations should possess some or preferably all of these skills.

HR contribution is aimed to optimise the people resource that benefits an organisation, society and its stakeholders. Leatherbarrow et al (2010) evaluated the HR contribution as a major implication of increased competition from an HR management point of view and increased pressure for the function itself to demonstrate its own worth in terms of value added and costs control. In the future we can expect to see more examples of HR accounting measures being developed and used, more quantative targets being set for HR specialists to meet, more benchmarking of HR performance and pressure to organise the HR function in such a way as to secure greater value for money. Greater use of IT as activities that can be automated and or transferred online to organisational intranets. In many cases this will reduce the requirement for HR roles.

There are many ways an HR function can be structured to deliver efficient services. Such as centralised, decentralised, account management, shared services, outsourcing, business partner, vendor management and centres of excellence. The Military organisation work within a centralised service that enables manning, operational effectives and well-being within the Army, further information can be located by any serving or veteran solider on the Joint Personnel Administration (JPA), a print screen of this can be located at Appendix A, links can not be provided due to restriction.

2.3 Business Performance & the change management agenda.

Some of the tools used to review business performance include financial and non-financial data, balanced score cards and other similar performance indicators such as Ulrich’s three-legged stool model (CIPD 2006) can be used.

In an article by Ittner C and Larcker D (2000) they suggested both advantages and disadvantages of Non-financial measures. They offer four clear advantages over measurement systems based on financial data.

a. First of these is a closer link to long-term organisational strategies. For example, new product development or expanding organisational capabilities may be important strategic goals, but may hinder short-term accounting performance. By supplementing accounting measures with non-financial data about strategic performance and implementation of strategic plans, companies can communicate objectives and provide incentives for managers to address long-term strategy.

b. Second, critics of traditional measures argue that drivers of success in many industries are “intangible assets” such as intellectual capital and customer loyalty, rather than the “hard assets” allowed on to balance sheets. Although it is difficult to quantify intangible assets in financial terms, non-financial data can provide indirect, quantitative indicators of a firm’s intangible assets.

c. Third, non-financial measures can be better indicators of future financial performance. Even when the ultimate goal is maximising financial performance, current financial measures may not capture long-term benefits from decisions made now.

d. Finally, the choice of measures should be based on providing information about managerial actions and the level of “noise” in the measures. Noise refers to changes in the performance measure that are beyond the control of the manager or organization, ranging from changes in the economy to luck. Five primary limitations have been identified as disadvantages;

Firstly, Time and cost has been a problem for some companies. They have found the costs of a system that tracks a large number of financial and non-financial measures can be greater than its benefits. Secondly is that, unlike accounting measures, non-financial data are measured in many ways, there is no common denominator. Evaluating performance or making trade-offs between attributes is difficult when some are denominated in time, some in quantities or percentages and some in arbitrary ways. The third issue is a lack of causal links with the fourth being the lack of statistical reliability – whether a measure actually represents what it purports to represent, rather than random \”measurement error\”. And finally although financial measures are unlikely to capture fully the many dimensions of organizational performance, implementing an evaluation system with too many measures can lead to “measurement disintegration”.

The Balanced Scorecard (see Appendix two) is a simple matrix that leads us to examine how each of the sections perform in each of the blocks (purpose, resources, enabling process, future). In the process, you can also assess individual performance against the same criteria. It not only sums up what we want to do, it does it in a way that assures everyone in the company knows what they are trying to accomplish and what is important in getting the job done, this is clearly identified in Appendix two, however, the balanced scorecard literature provides little discussion of the scorecard\’s role in compensation decisions, despite the fact that the majority of adopters use the scorecard for this purpose (Towers Perrin, 1996).

Currently the public sector organisations across the UK have been subject to cuts in government spending, this includes the Defence where the government has reduced its forces by 7,000 personnel, many of these were compulsory redundancies. Retention within the military is still at risk, however the MOD is working hard to tackle these issues.

3. Learning Outcome 2

This must meet the Assessment Criteria’s 21, 2.2, 2.3 & 2.4 based on the main external contextual factors impacting on organisations and the HR function.

3.1 The Market and competitive contexts of organisations.

Within the forever changing climate, both public and private sectors have to cope with turbulent and changing external contexts. These are driven by competition, change agenda and the recent announcement of BREXIT. In 2010 the government published the outcome of the Strategic Defence and Security Review (SDSR) setting out how we will deliver the priorities identified in the National Security Strategy. In the announcement it was decided that the government would reduce its forces by 7,000 soldiers, these job cuts were reached well ahead off the 2018 target. Ministry Defence figures show that there are currently 81,700 full-time service men and women in the Army, down from 102,260 in 2010, Atkinson, E. (2015). Within the Armed Forces the MOD created a series of tranches which broke down the redundancy phases, so as not to engulf the military with great numbers of losses in one serge.

3.2 Demographic, social and technological trends affecting organisations.

Demographic changes have expanded the diverse structure of the UK population, where organisations employ people who come from a range of national, religious, social, cultural and ethnic backgrounds. Additionally there are differences in age, gender and physical ability, including disability. This has focused the attention of the need to recognise diversity (Leatherbarrow et al 2010). It is evident that these demographic shifts are going to require new ways of thinking by HR departments globally, and subsequently professionals working within this industry will need to be one step ahead of the emerging trends. The Army welcomes people from all backgrounds whatever the gender, race, ethnic or religious beliefs, no account is taken of sexual orientation or social background. An outdated legal ban (Criminal Justice and Public Order Act 1994) that was put into force in 1994 forcing gay men out of the armed forces is set to finally be officially removed from armed forces legislation, this clearly shows that the polices and legislations are changing to fit the demographic changes. Changing the amendment is a practical step which shows that this Government is serious about our commitment to equality in this area.

‘Rapid advances in HR technology predicted to ‘directly empower managers and employees’. (Arnstein and Jeffery, 2015). This article from the People management magazine clearly shows that technology plays a big role in HR. Technology continues to improve effectiveness and efficiency within organisations and increases productivity, recruitment and performance management. However, rapid advances in technology also means that employers and employees must engage and move forward with the technological advancements.

3.3 The nature of globalisation and international factors affecting organisations.

Globalisation is a term to describe an element of a modern business that work globally; importing and exporting products and services and If business expands then they could effectively appoint agents in overseas countries to represent them or they may institute overseas subsidiaries.

Organisations must compete in international markets as well as compete against foreign corporations, they must develop global markets, use their practices to improve global competitiveness, and better prepare employees for global assignments to achieve success . As businesses grow larger and more powerful, some commentators grow concerned that their commercial interests can destabilise and harm the economies of individual countries, especially smaller countries in the developing world (Torrington et al 2011). Ngaire Woods sees globalisation as political and social as much as economic. She identifies three elements: (Woods, 2000)

The Expansion markets – Is the transformation of global economic activity that advance the means of communication, an example of this is the mobile phone. Due to these technological changes, we have multiple ways to communicate such as text, email, talk or Skype. The mobile phone alone allows quick and simple delivery processes and allows us to perform everyday tasks faster and with less energy and cost.

The transformation of politics -. Freedom of capital movement is essential element for the operation of the large European internal market. The liberalisation of payment transactions is a vital complement to the free movement of goods, persons and services. ‘After Brexit: The struggle for socialism in Britain’ (Marsden 2016). Britain is at a turning point in the political life of the UK. The June 23 referendum vote to leave the European Union (EU) has accelerated an economic, political and social crisis, not just here, but throughout Europe and internationally. “In the space of just one day, global markets lost two trillion dollars. Former US Federal Reserve Chairman Alan Greenspan said Brexit would prove to be more serious than the financial crashes of 1987 and 2008” (Marsden 2016).

The Emergence of new social and political movements – Globalization affects more than markets and organisations, it is changing the lives of people across the globe and affecting their culture and values. Globalisation represents a distinctive further step as large corporations such as Nestle’, Vodaphone and McDonalds operates in different countries and regions.
As these businesses grow larger and more powerful, some commentators and pressure groups grow concerned that their commercial interests can destabilise and harm the economies of individual countries, especially smaller countries in the developing world (Torrington et al 2011).

At the same time Counter-movements have developed In the new age of globalization, the repercussions of rising radical transnational social and political Islamist forces have lasting effects on world socio-economic and political strategies. globalization involves socio-cultural, technological, economic, environmental, political and social processes.

3.4. The impact of government and EU policy and the regulations on organisations.

During the last few years, the impact of EU policies and regulations on organisations has grown considerably. For example, within the social and health services EU legislation and a set of Community rules in relation to competition and internal market (public procurement) are being applied and as a rule have been classified as economic activity following European Court of Justice (ECJ) rulings. The European Commission is of the opinion that EU legislation in this field is neutral and that potential problems are mainly due to lack of knowledge and misunderstanding on the part of national, regional and local authorities in relation to the application of the legislation rulings.

Torrington et al (2011) describes that there is a long-term trend which has had a major impact on the way organisations manage people in recent decades which has been the substantial increase in the extent of employment legislation. Over the past 40 years the UK has moved from having some of the most lightly regulated labour markets in the world to sharing, along with other EU member states, a highly regulated system. So great has the transformation in the amount of regulations to which the employment relationship has become subject and its day today impact on management practice. With regards to employment law, some areas are a great deal more employer friendly than others. The overall impact has been to restrict the freedom of managers to run their organisations in way that they might otherwise wish to. In addition to the current laws, in 2011 the EU regulations extended a measure of protection to agency workers. However, with all these law changes is does not mean that the obdurate impact of regulation on organisations will lesson, nor that HR managers will have to pay less attention to developments in the regulatory sphere.


Atkinson, E. (2015) Armed forces job cuts reach target three years early. Available at: http://www.bbc.co.uk/news/uk-33638492 (Accessed: 31 July 2016).

Rapid advances in HR technology predicted to ‘directly empower managers and employees’ – people management magazine online (2014) Available at: http://www.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2015/10/22/rapid-advances-in-hr-technology-predicted-to-directly-empower-managers-and-employees.aspx (Accessed: 1 August 2016).

Woods N, (2000), The political economy of globalisation, Basingstoke, Macmillan

Marsden, C. (2016) After Brexit: The struggle for socialism in Britain – world socialist web site. Available at: https://www.wsws.org/en/articles/2016/07/30/mars-j30.html (Accessed: 1 August 2016).


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