"CHRM Business Issues and the Contexts of Human Resources 1 Table of ContentsIntroduction ................................................................................................................................ 3An analysis of some of the key forces which shape the HR agenda e.g. models of the HRfunction, HR strategies, insights and solutions to support business performance, businessethics and accountability. (AC2.1)............................................................................................. 4Compare different tools for analysing the business environment e.g. SWOT, PESTLE,Porter?s 5 Forces etc. (AC 2.2) .................................................................................................. 6Assess a range of different factors which impact on an organisation?s business and its HRfunction. You should include examples of external and internal factors to illustrate thedifferent types of impact. (AC1.1) ............................................................................................. 8Summarise the key stages in strategy formulation and implementation with reference to amodel from the literature. You should also refer to the role of HR in each of the stages and inparticular, highlight HR?s contribution to business ethics and accountability. (AC 2.3 and 2.4) .................................................................................................................................................. 11Give some examples of how business performance can be evaluated, making reference totraditional and modern indicators. You should make particular reference to the role of HR inbusiness planning and change management with some examples to illustrate HR?s key role.(AC 3.1) ................................................................................................................................... 13All actions that took place in a business environment to achieve the objective always havefinancial implications and hence they are measured. Without proper measurement,performance cannot be gauged and objectives cannot be met. ................................................ 13Explain how different sources of business and contextual data can be assessed and utilised forplanning purposes e.g. internal information within the organisation including HR metrics,industry information e.g. trends in HR, competitive information, government information.(AC 3.2) ................................................................................................................................... 15Conclusion ............................................................................................................................... 17Reference List .......................................................................................................................... 182 IntroductionAll managers - those involved directly in human resource management (HRM) and managersof other business functions – need to have a good understanding of the organisations theyserve and the contexts in which they operate (Brewsteret al. 2016, p. 285). That must alsoinclude the objectives and strategies of the organization, various factors at play both insideand outside of the organization that may impact the strategy of the organization.Theassignment covers the importance of human resource management in the organization?sstrategic management both in decision making and in implementation. It looks at variouscontributions by HRM that translate into actions and objectives of the organization.Theassignment also covers the ways in which HRM adds value to the organization and identifiesways so that people management and development both occur simultaneously.3 An analysis of some of the key forces which shape the HR agenda e.g. models of the HRfunction, HR strategies, insights and solutions to support business performance,business ethics and accountability. (AC2.1)There has always been challenges to HR because of which it is not able to deal with theissues of the broader business perspective. Hence, HR agenda keeps on changing andevolving to meet the new challenges and face them to present a solution as per today?s age(Kaufman, 2016, p.339)Earlier on, HR had had very “open door” and direct relationships with the employees of theorganization, often posed as the voice of the employee. Today, HR needs to be efficient in theorganization to extent of responding to needs in the organization from all quarters such asCEO, CFO, in-line managers as well as employees.Some of the traditional models of HRMare as follows, a. The hard and soft HRM model – this model had more of a humanitarian approach andwas based on human relations. It emphasized on communication, leadership andmotivation. The HR agenda thrived on them to build an agendab. Contextual model – this model integrated the environment of the business (internaland external) to its HR approaches. Multiple stakeholders were engaged informulating HR policies and strategies and hence is also referred to as „multiplestakeholder framework? (Chenet al. 2016, p. 536). This model had a little widerperspective to how HR agenda could be built in combination with inputs from variousstakeholdersc. Matching model – it emphasized on matching the HR systems and organizationalstructure with organizational strategies. This had even broader perspective andwidened HR agenda goalsd. European model –a multiple combination of environment, objectives, focus,employee relationships, managerial relationships, role of HR. It emphasised on socialresponsibility, multicultural organizations, dialogue amongst social partners, decisionparticipation and an environment of continuous learninge. 5P model – 5Ps stood for philosophy, policies, programs, practices and processes. Itvery clearly laid out what the HR agenda was supposed to be at every P stage 4 HR has traditionally stratified its functions under strategic, administrative and execution.Strategic role implied to planning, designing, research and strategy development,administrative function entailed coordination and scheduling and execution embodied HRcustomer handling, strategy delivery and process based advices. Today, HR presents itself asa strategic partner, as administrative expert, as an employee champion and most vital of all, achange agent. The change in model of HRM in recent few years has freed up HR to deliverby chartering special goals for each role.This has given a holistic approach to tackling the everyday issues. By having a strategicpartner who clearly focuses on tackling issues, an administrative expert, who can support thefinancial goals of the company by focusing on having an efficient and high quality service, anemployee champion who is able to focus on the employee relationship and improve employeecapability; and finally, the change agent role which allows to meet the challenges of thechanging business environment and positions the business to execute strategy efficiently(McCrackenet al. 2017, p. 59). These support business performance, ethics andaccountability on most fronts.Competition, compensation, legislation and employee relationships still governs the way theHR builds its activities. The continuing new business challenges need HR to have a focusedagenda. The HR agenda needs to:a. Have a set of clear choices – connect the people need to business needb. Define proper goals for HR outcomes and chalk out proper responsibilitiesc. Guide resource allocation as an investment to the right jobs/activitiesd. Motivate people towards the impactful thingse. Instil among people a sense of purpose to achieving their objectivesf. Define proper organizational and systems framework across business units for HRfunctions5 Compare different tools for analysing the business environment e.g. SWOT, PESTLE,Porter’s 5 Forces etc. (AC 2.2)Analytical tools and method are keys to ensure consistency and accuracy to analysis. It helpssharpen the focus of analysis and ensures a methodical and a balanced approach.One of these methods is SWOT analysis or strength, weakness, opportunities and threatanalysis. Project managers apply this method to check where their venture stands, it could beconducted for business ventures, products, people as well as places. They are plotted in a 2*2matrix. Strength and weaknesses are assessed against the internal environment and theopportunities and threats against external (Cetinet al. 2016, p.81). Project manager needs tofirst state the objective of the project/business activity and then identifies the factors.PEST analysis is a scan of the external macro-environment of the organization. PESTanalysis analyses the political, economic, social and technological factors. It is generally usedto check the market growth/decline, position of the company as well the potential direction itshould be taking. A PEST analysis is usually conducted prior to SWOT analysis.It is muchmore detailed than SWOT as it studies the opportunities and threat section exclusively of theSWOT.Porter?s five forces model does a competition position analysis. Five forces are – supplierpower, buyer power, and competitive rivalry, threat of substitution and threat of new entry.This model assesses and evaluates the competitive strength and position of a business entity.It points out where the power lies in a situation. Analysts prefer Porter?s five forces model toevaluate whether the new products and services are profitable to the organization or not. Byidentifying areas of strength, it also helps improvising on countering the weaknesses andharnessing the opportunities by avoiding mistakes (Dickmannet al. 2016). It also providesinsight to a new position the organization may be vying and the strength of that position thecompany is looking forward to moving into.Four corner?s analysis, also developed by Michael Porter helps analyse competitors. Theanalysis provides insights to potential strategies that may be taken up by the competitors andthe outcomes. It is used to analyse the reverberating effect of changing strategies thatcompetitors could opt for in such a situationby the management. It points out the probable 6 reaction of competitors in response to industry shifts and the environmental changes that maytake place. The four corners refer to future goals/drivers, current strategy, assumptions andcapabilities. They are then laid down against motivation and action. Drivers and managementassumptions are checked along motivation and strategy and capabilities under action. Hence,this analysis proves very useful to predicting the competitors? response to a businesssituation.STEEP analysis and STEEPLE analysis. They are next stage to PEST analysis. STEEPanalysis counts in the environmental factors. The environmental factors to consider would beair, water, soil, pollution, food, soil energy and environmental regulations. That helps themanagement to assess the positive or the negative impacts the company has on environmentand take necessary action to curtail the negative effects (Mencl and May, 2016, p.247). InSTEEPLE analysis, the management adds on the legal and ethical factors. The analysis helpsmanagement deal with legal complications, if any. It also assesses the changes to legalrequirement and keeps in check that the business is legally compliant. Ethical factors aremostly about social values and checking what is wrong or right and making small changes tomaintaining a clean image.Value Chain analysis is often conducted by the management to check how their actions arecreating value for the customer. In the analysis organization?s activities are segregated intovarious activities (primary and support) that add value (Buller and McEvoy, 2016, p. 467).The management acknowledges that every value addition provides the business a competitiveadvantage. This technique helps the management to find out the sources for competitiveadvantage.7 Assess a range of different factors which impact on an organisation’s business and itsHR function. You should include examples of external and internal factors to illustratethe different types of impact. (AC1.1)There could be different types of organizations such as a. Public Organizations – they are government controlled and they have been created toprovide service to citizens of the country, example – education institutions, medicalcentres etc.b. Private organizations – they are commercial in nature and purpose of creation is tomake profit. Example manufacturers, retailers etc.c. Not for profit organizations – these business entities have been created to provideservice to public but not generating profit from their activities. Example – charityorganizationsd. Social organizations – such organizations are usually created to benefit the workforceof their ownBased on the organization type there could be various external and internal factors at playwhich could affect the business of the organization and subsequently to its HR function aswell.Some of the external factors the business gets affected from are:a. Competition – for the organization to thrive, the management looks for ways toexpand by tackling competition. Every competitor is a threat to its market share. Themanagement may decide on strategies to achieve one or multiple competitiveadvantages such as the cost advantage, quality advantage or the differentiationadvantage. This impacts HRM as more market share would mean better inflow ofrevenue in organization. The workforce would be easy to retain by HR. Also withfurther expansion, new resources would be required to be recruited (Townsendet al.2016, p. 1) On the other hand, if the market share were less, revenue would be muchlesser. Employee attrition may be at rise and retaining would be a major taskb. Technology – as it is ever changing the management must strategize to include newtechnology in its products/services to provide the customer their value of money.Better technology would require a better organizational sub structure. The projectionof business income could be higher with the inclusion and employee wages andsalaries would see a subsequent improvement as well (Wilton, 2016). Furthermore,changes in technology can make it possible to have improved human resource 8 functions such as selection, recruitment, training, performance appraisal or also forobserving, determining wages and salariesc. Changes in domestic/international economy – With the integration of worldeconomies within a short span of time all economies get impacted. If any importantcountry faces recession, same conditions do get replicated in other economies as well.With deterioration in world economy bargains with unions and firms get difficult,sales would decrease and that shall have impact on wages and salaries too (Weichtetal. 2017, p. 51). Unemployment could rise. On the other hand, if situation reverses,HR policies change in a positive way, employment also risesd. Culture and Traditions – Culture and traditions affect the behaviour of the workforcein a large way as that decides their approach and behaviour in large way. This affectsin turn the HRM functions. The business activities and „behaviour? of organizationought to be in line with the cultural sentiments of the nation/place (Armstrong andTaylor, 2017).e. Industry characteristics –different industries behave and affect the HRM in that sectorin different ways, some are technologically very high and evolving, and some may begood paymasters, some production oriented and some customer oriented. HRM needsto create strategies to suit the environment and provide the best possible environmentto their employees according to the sector (Sparrow, 2016).f. Legislations – As with business operations, all HRM activities also need to be legallycompliant with the laws/standards set by the country?s government. Thus, lawstructures the HRM practices in an organization just like it decides what ispermissible as business for an organizationSome of the internal factors that affect the HRM functions along with the business are:a. Mission and Vision of organization – mission statement decides the framework ofoperations for the organization and hence, it has its impacts on the HRM function aswell. The management decides the goals and objectives of the business and mandatesthat the policies, practices and processes should be in line with the goalsb. Organizational strategy – the actions that would be taken by the organization shalldefine its path to achieving the goals and objectives set by the management. All HRfunctions should be strategically lined and embedded in the strategy that shall betaken up by the management on this path 9 c. Structure of the organization – depending on whether the organization is horizontal orvertical in its structure, HR functions accordingly are overseen by the management. Avertical or centralized approach keeps HR in tight control of higher management. Inhorizontal, it is much more relaxedd. Organization size –if the organization size is big number of operational activities shallbe bigger and so will the HR functions/duties. In a smaller organization, the numberof functions way lesser. Also, the size sometimes affects the nature of themanagement as in autocratic or participative (Bogdanovicet al. 2016, p. 429). Inlarger organizations, different departments are more autonomous and similarly HRfunctions and behaviour shall be different as well10 Summarise the key stages in strategy formulation and implementation with reference toa model from the literature. You should also refer to the role of HR in each of the stagesand in particular, highlight HR’s contribution to business ethics and accountability.(AC 2.3 and 2.4)Strategy formulation and implementation is essential for business as it helps the managementcope with competition.Often the management models this around Porter?s five forces model. According to thismodel, five forces of competition are:a. Competitive rivalry in an industry – the strongest competitive force/s determinewhether the industry is profitable and how much.b. Threat of new entrants – new entrants bring new capacity to the industry. Newplayers, depending on the factors of barriers to entry in a market may pose a threat ornot to a business entityc. Bargaining power of suppliers – suppliers are important because their relativepowerdetermines the final price of the product. d. Bargaining power of the customer – similarly presence of lot of similar-objects inmarket may influence the pricing and continuity of the producte. Substitutes – this affects the degree of competitiveness tooStrategic decision making is how best to make a suitable match between the organization andits environment. It is never a permanent solution, improvisation and monitoring go hand inhand to fit into the business environment. Strategy formulation stages are –a. Setting organization objectives – As per the business environment, long termobjectives are set. Objectives define where to go and strategy; how to reach there. HRplays a crucial role in embedding the objectives set up by the organization andcarefully implementing them through processes and practices to set the environmentto reach the objective (Tarba, and Cooper, 2016). b. Evaluating the organizational environment - In this phase, all five forces of Porter?smodel are assessed to gauge the present competition position of the organization. Thishelps the organization identify its own strengths and weaknesses along with thecompetitors. The management reviews its own product line both quantitatively andqualitatively. HR is crucial in this stage as it ensures the management has the proper 11 people in right places and if required, improve through recruitments, trainings,sessions and accordingly assist in filling the gaps post analysisc. Setting quantitative targets – To meet the organization objectives, the managementmay fix the quantitative targets. HR ensures that the right resources are in place andprepares the organization for the next positiond. Aiming in context with divisional plans – contributions made by eachdepartment/division within the organization is identified and in case of gaps strategicplanning is carried out by the management for each unit.e. Performance analysis – The gap between desired and achieved targets is assessed andnecessary planning is carried out by management. HR evaluates the gaps in terms ofknowledge, skills and attitudes and takes necessary actionsf. Choice of strategy – the best course of action is taken based on the above analysis.In implementation of the strategy, HR has a great contribution by developing the organizationhaving the potential to carry out the strategies successfully. HR ensures that the resources areabundant to all essential activities, it creates necessary policies and processes whichencourage the implementation of the strategy (Gomeset al. 2016) HR also formulates sub- strategies to continuous improvement. HR also creates the necessary reward and appraisalsystems to keep the workforce motivated and charged to accomplishment of results. It usesthe strategic leadership to implement at all levels for the same.12 Give some examples of how business performance can be evaluated, making referenceto traditional and modern indicators. You should make particular reference to the roleof HR in business planning and change management with some examples to illustrateHR’s key role. (AC 3.1)All actions that took place in a business environment to achieve the objective always havefinancial implications and hence they are measured. Without proper measurement,performance cannot be gauged and objectives cannot be met.Checking the efficiency ratio is a traditional method to evaluate how well the assets wereutilized to generate income. A balanced score card system or BSC, most popularly used newmethod takes in to account the competitive forces at play in the environment as well directlyfocuses on the long term financial goals and includes the other factor needs to fill the gaps.Example – earlier performance measurement occurred on few parameters like actionprocesses, results achieved, financial measures etc. Now, with the help of BSC, abrand-newframework which includes various measures to ensure the complete and balanced view of theperformance of the employees is deployed by HR (Teague and Doherty, 2016, p. 339). Itfocuses on the measures that drive performance.Similarly, assessment of a businessexcellence solely depended on the quantitative data which did not yield any reasons toperformance data but with the introduction of BSC, the management can get an all-aroundview of the performance and how it fared against the current market conditions and otherbusiness acumens in the environment. The management could improvise and make newstrategies to get the edge.To remain competitive, change management is a permanent business function to keep theorganization efficient and adaptable to market changes. HR proves as a strategic partner, anadministrative expert, people advocate and even a change agent in such scenarios. To achievethe same HR may:a. Redesign policies that improves employee?s motivation and behaviourb. May refine performance appraisal methodsc. Redesign pay systemd. Develop new leadership capabilitiese. Create better culture encouraging learning of new skills 13 f. Conduct recruitments selection etc. 14 Explain how different sources of business and contextual data can be assessed andutilised for planning purposes e.g. internal information within the organisationincluding HR metrics, industry information e.g. trends in HR, competitive information,government information. (AC 3.2)Business planning is crucial to survival. A good planning helps the management focus bettertowards the set steps to achieve its objective rather than finding its way along which may takea lot of more time and other resources. Availability of information internal to the organizationincluding HR metrics could assist the top management who must make long term decisions.Strategic information will have mix of both information from internal as well as externalsources. Internal information could be tactical which is usually function related. They areutilized by middle management for planning purposes like how much downtime must beallocated for maintenance (Rohlfer, and Zhang, 2016, p. 41). Other could be operationalinformation which could be used by lower level management in their day to day operations.Internal information like marketing and sales information on markets, shares, distributionchannels, HR metrics, production information, financial information and other internaldocumentation allows the management to view their current position internally (Psychogioset al. 2016, p. 115). This shall provide the management with information on their strengthand weakness.External information line census numbers, communication information, professionalpublications on industry trends, internet, industry standards etc. provide the management withinformation on their external environment and helps in assessing the opportunities andthreats. This information could be obtained from government agencies or private firms.The available information assists the management in planning, controlling and makingdecisions on their business objectives. The information when presented appropriately shallact as a snapshot of the entire environment of business both internal and external. Themanagement shall be able to:a. Make efficient use of resources – Both large and small organizations have limitedresources, the information assists the management to make efficient resource 15 allocation decisions. This prevents wastage and optimum resource utilizations ispromotedb. Establishing goals – the assessment of the strengths, weaknesses, opportunities andthreats show the top bracket the gaps and allows them to make contingencyapproaches to filling the gap to achieve the final objective. Thus, goal setting isachievedc. Managing risks – External environment is out of control of the organization. In casesof unforeseen circumstances the system does not break down owing to the planningthat was done in a „what-if? approach as welld. Team building - planning encourages team building and cooperative spirit. Everyoneis aware of their key responsibilities and the expectations the management has fromthe employees (Huang, and Lin, 2017, p.324). Potential conflicts are also evadede. Creating competitive advantage – analysis of the data also brings to light theweaknesses of the competitor. Following actions of the competitor also provided themanagement the crucial information to tackling their own weaknesses and identifymore opportunities16 ConclusionAs is evident, it is easy for the management to respond to changes and adapt plans or modifystrategy after it has examined the external and internal factors affecting their environment andtheir chances of succeeding in the organizational strategy built to capture market.Theassignment also highlights how organizational strategies are formulated and then furtherimplemented with contribution from HR, various analysis conducted to check theorganization?s situation in market. 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