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External Environment Factors In Human Resources Commerce Essay

Paper Type: Free Essay Subject: Commerce
Wordcount: 5402 words Published: 1st Jan 2015

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Human Resource Management according to Laurie J. Mullins (2007) illustrates as the involvement of management decisions and practices that directly influence the people or human resource, who work for the organisation. This could be seen as the aspect of developing people to get the best out of them as well as improving their potential for better performance at the work place. It could be said as well that it is a design, implementation and maintaining strategies to manage people for a proper business performance which also include the development policy and it also contributes to the evaluation of the people operating in the business or organisation.

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A more detailed definition was given by Torrington et al. In 1995 remains unchanged today and it states, Human Resource Management is a series of activities which enables working people and the organisation and it also uses their skills to agree about the objectives and nature of their working relationship and also ensure that the agreement which was made by the both practice is fulfilled.

Human Resource as it is seen is said to be the most important aspect of any existing organisation and it has a clear objectives that has to be followed in other to get an expected goals set out for the organisation. This is also a means of motivating the people working in an organisation by seeing to their needs as; motivation, responses to grievances, training, recruitment and selection.

To mention but a few at this time, more will be analysed as the study of HRM continues in this assignment. The activities should be clearly stated in order to achieve an expected goal as earlier stated. There is also a hierarchy that needs to be followed which are Managers, Supervisors and Operations. This could be seen as the levels of which the activities of any organisation are carried out with its policies. As this assignment continues in the subsequent pages, the role HR plays taking into consideration the changes in the external environment and how it will help organisation gain competitive advantage.

External Environmental Factors

To develop and implement effective human resource strategies, you must first understand the environment context in which human resource operates. The external environmental factors i.e. the STEP factors outlined below can have both positive and negative effects on this business. Neglecting the external environment can have devastating effects on an organization. Entire civilizations have vanished for failing to address external environmental factors and the need to adapt in an ever-changing environment. The most important part of HR planning regarding the external environment is environmental scanning, a means to study the environmental climate to identify opportunity or potential dangers to an organization Jackson and Mathis, (2008). As we move into the next century, the necessity to adapt, change, and update will be more important than in the past.

Political environment-:

The administrative and legal environment in a country provides a framework within which an organization operates. In some countries this environment is very restrictive and has significant impact on all aspects of the organization; in other countries the administrative/legal context is more permissive. Understanding the administrative/legal environment is essential to determining if organizational change can take place. The administrative context within which the organization operates may be shaped by a unique combination of forces, including international, governmental, nongovernmental policy, legislative, regulatory, and legal frameworks. An organization is affected by the policy or regulatory context that gave rise to it. This includes specific laws and regulations that support or inhibit the institution's development. There are a number of reasons why the legal environment is important to any business, According to (Brassington and Pettitt (2006) there are three main forces within the political and legal environment ie national, local government and EU and various regulatory bodies. These forces are important and necessary because the problem with self- regulation is that its creates tension between what is socially desirable and what those in the industry may consider to restrict commerce improperly. Organizations have to exist and operate according to the laws the societies within which they do business and thus in addition to the more general laws of contract and commerce, product have to conform to safety laws, patents protect innovation.


THE UK government increased the retirement age of male workforces from 65-70 years. It will deprive organisation from employing fresh blood, but HR can put up a back-up plan like voluntary retirement and early retirement programme. This measure will also help when company is facing redundancy in other to minimise the negative effect on organization.


New employment legislation carries implication for organisation, e.g. the rules that outlaw 'ageism'(introduced in 2006); for a wider overseas trading context, international agreed sanction may curtail, or even outlaw, the trading of companies in one country with companies in another, especially if the latter country is said to be involved in terrorism or human rights abuses. Recent examples include the way in which the Saudi Arabian government has applied pressure to Britain to cease its investigations into allegations of corruption by British Aerospace in a securing of defence contracts, and the widespread disapproval of the child labour practices endemic in some part of the world.

Economic environment

Economic changes are concerned with the influence of regional, national and international economic conditions upon the fortunes of large organisations. Sometimes the economy is optimistic and in a state of boom and plenty, unemployment is low, industrial and high-street spending are high and property value soar. At other times the economy dips and the 'highs' just mentioned go into reverse. Organisations have to adjust to alternative peaking and dipping of the economy, and internally and must prepare themselves for these in evitable situations. When the organisation context is global, on the other hand, the influence of economic factors is much more complicated, because if one country or region is experiencing a period of prosperity, it is quite likely that in another part of the world there is a recession. Whether the organisations are literally global or not, large or small, they are not immune to the consequences of globalisation: according to HR specialists must keep an eye on these economic pressures and seek where possible to minimise the negative impact and seize the advantages when they occur. When organisations expand during a period of prosperity, for instance, there are usually staff shortages, especially of rare technical skills; conversely, if organisation over- reach themselves they may have to close facilities, make people redundant, or shift some of their operations to other part of the world where are lower (e.g. take customer services and IT to India or China).


As seen in the BBC news few months ago Virgin airline HR manager was able to put a strong argument down for the rationale for the job cut and hours reduction of the employees due to economic downturn and promise to reverse the decision as soon as thing improve. In the case of British Airways the argument was not that strong and was not acceptable, that has led to series of strikes action by the employees and this development had cost British Airway to loss millions of pound.

Social and cultural environment-: it is very important to consider changes such as population growth, movement and age distribution, as well as changes in cultural values and social trends such as family size and social behaviour. Factors to consider might include consumer life styles, education, and religion. Social and cultural forces at local, national, and often regional levels have profound influence on the way organizations conduct their work and on what they value in terms of outcomes and effects. For example, the mores of an indigenous culture have a bearing on the work ethic and on the way in which people relate to one another. Undoubtedly, the most profound cultural dimension is language.


In Sainsbury current trends indicate that British customers have moved towards 'one-stop' and 'bulk' shopping, which is due to a variety of social changes. sainsburys have, therefore, increased the amount of non-food items available for sale.

Demographic changes such as the aging population, an increase in female workers and a decline in home meal preparation mean that UK retailers are also focusing on added-value products and services. In addition, the focus is now towards; the own-label share of the business mix, the supply chain and other operational improvements, which can drive costs out of the business. National retailers are increasingly reticent to take on new suppliers (Clarke, Bennison and Guy,1994; Datamonitor Report, 2003).

The type of goods and services demanded by consumers is a function of their social conditioning and their consequent attitudes and beliefs. Consumers are becoming more and more aware of health issues, and their attitudes towards food are constantly changing. One example of sainsburys adapting its product mix is to accommodate an increased demand for organic products. The company was also the first to allow customers to pay in cheques and cash at the checkout.

Technology environment-: the technology environment includes the level of advancement in technical knowledge and equipment and rate of development and application. At the same time the business have to look at the nature of their products and cost effectiveness as well as their performance in relation to competition. Factors might include new technology processes, energy saving techniques, better equipments, new product development, new materials and substitutes for existing materials.New approaches to doing new and old things, and tackling new and old problems do not necessarily involve technical factors, however, technological factors are vital for competitive advantage, and are a major driver of change and efficiency. Technological; factors can for example lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. New technology is changing the way business operates. http://www.ivoryresearch.com/sample5.php


In tesco technology is a major macro-environmental variable which has influenced the development of many of the Tesco products. The new technologies benefit both customers and the company: customer satisfaction rises because goods are readily available, services can become more personalised and shopping more convenient. The launch of the Efficient Consumer Response (ECR) initiative provided the shift that is now apparent in the management of food supply chains (Datamonitor Report, 2003). Tesco stores utilise the following technologies:

Wireless devices

Intelligent scale

Electronic shelf labelling

Self check-out machine

Radio Frequency Identification (RFID).

The adoption of Electronic Point of Sale (EPoS), Electronic Funds Transfer Systems (EFTPoS) and electronic scanners have greatly improved the efficiency of distribution and stocking activities in tesco, with needs being communicated almost in real time to the supplier (Finch, 2004).


HRM practices as expected in this assignment can be viewed as the concerns of every manager in any existing organisation. It is seen as a modern and highly competitive times which proves to be just one successful way out for an organisation most times it has to deal with human resource issues. The need for people in any organisation is a very important aspect because without people in the organisation, there will be no work done. Julie Beardwell and Tim Claydon(2007) In HRM practice the consideration of people, performance, enlightenment, progress and commitment is expected for a better performance. For a better performance these points listed below will be considered: Derek et al (2002)

HRM strategy



Organisational structure

Training / Development

Rewards at work

HRM strategy as seen with these authors Beardwell & Holden (2001) Human Resource Management in explanation suggests that a strategy is seen as a defining feature for HRM as it emerged in the 1980s. It has come to play a role in planning of organisations not just the literature aspect but also in practitioner activity as well. Two strategic approaches were mentioned that has gone a long way to enhance performance in HRM and are listed below and an additional one that is needed in the strategy as well.

Macro - strategic issues and locations within the organisational structure

Better recruitment and selection

Job design

The macro-strategic issues and locations within the organisational structure is been said to be an issue to be considered and put in place in other to yield an expected result. As the case study of this assignment has specified that one of the importance of HRMP are identified to be the organisational structure, this is to an extent a fact because if the organisational structure is not in place then there will always be matters arising from this aspect all the time. This is said to have emerged in a contemporary explanation for HRM's strategic positioning in the use business focus. HRM is expected to link up with this to illustrate the range of organisational activates, looking at the example of the NHS.



An illustration was given on how the use of HRM strategy has helped the management in the NHS to achieve a reasonable goal. It shows a major factor that HRM practise has achieved by stimulating a closer linkage by the realisation that variability of treatment rates between different hospitals may be as much to do with the management of the clinical personnel as with their access to medical technology. With this the health service provides an excellent example of the strategic positioning of HRM.


The use of the employee involvement and relations is a very important aspect to be considered and involved in any organisation because it makes the employee feel involved and increases the restricted manner a way of addressing some individual and collective aspects of employment relations in the workplace. Looking at this aspect, Bratton & Gold (2007) interprets this that it denotes an assortment of employer and government initiates for improving a two way communication in the organisation between employee and management and this is to engage employee either directly or indirectly in decision-making in matters that affect them, for protecting employee rights for securing employee compliance with management rules through disciplinary action.


Employee rights

Employee discipline

Employee involvement

Employee communication

Source: John Bratton & Jeff Gold (2007) Human Resource Management (Theory and Practice)


Job design can also be used as HRM strategy. According to Beardwell & Holden (2001) it is the product of management initiative. This also has now become a 'contested terrain', the contingent product of what some call a 'structured antagonism' (Edwards, 1986) between capital and labour. This brings up the study of human relations at work as a way of thinking about how jobs could be designed to secure some accommodation between the need of employees. Mayo, Roethlisberger and Dickson, the UK-based studies emanating from the Tavistock Institute, and the various movements addressing the quality of working life, arose in response to the perceived failures of Taylorism.

This is seen as a change and moving things from one place to another and also gains commitment to change. Culture is said to develop over a period of time and not to be imposed and it is likely to emerge from a conflict of values and beliefs. It has been proven that HRM has been embraced by many working within the theory and practice of job (re) design is still founded on the prediction and promise that individuals need to be provided with stimulating and 'enriched' jobs, which tap those intellectual and cognitive domains left dormant by the traditions of organisation and management. This will encourage them to perform far more varied and skilled jobs.


In September 11, 2008 it was reported that more than 11,000 British jobs could be at risk after the Defence of US Department cancelled a contest bidding job worth of a £20bn for a fleet of new air refuelling tankers. This could be seen as one of the practices of HRM in an organisation, getting information and finding a solution to it before it gets out of hand or have an adverse effect on the organisation.

Recruitment - according to humanresources.about.com is the process of finding candidates, reviewing applicant credentials, screening potential employees. Finding those candidates or employees as stated that will fit the purpose of the organisation. To achieve an effective result of this exercise getting those employees who are skilled, experienced and good fit with the organisation as stated, also those who will be loyal to the organisation should be giving a consideration by using the preferred method. There are several methods of recruitment which are social network, job center plus, newpapers, employee referral scheme, search consultants, commercial job boards etc.

These few mentioned are methods of recruitment and most times it has turned out to be the best option or medium of recruitment. Using the social network could be either good or bad because most people not knowing using their pictures and slangs to portray them selves could be rejected by such acts without them knowing.

In recruitment there has to be a consideration of the individuals that are being recruited to see how the performance can be and development as well as expected in the human resource cycle.

The means of employing and managing people includes a trial of techniques stretching from job analysis through selection, pay, appraisal, training and so on Peter Boxall & John Purcell (2003).



As seen in the case of Metro in August 13, 2004 the case revealed how this fellow was employed and has been working with the Scotland Yard police force. He lied about his past and was given the position of patrol officer to go through the streets of Belgravia, West London. As the case shows he faced dismissal and has been taken away from the street till his case will be finalised. These are responsibilities of HRM to carry out some checks in terms of recruitment and selection.

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This social network site revealed by Metro, September 29, 2008 began operation in 2006; they were mainly using radio and newspaper adverts. They now use face book to recruit secret agents as part of its drive to find operational officers and the aim was specified by the Foreign officer was to reach a wide variety of people, it also targets pools of talented representatives of British society. Most people have decided to use this site as fun and time keeping network and will be reminded at a time like this that it could ruin or benefit them to a greater height. It has also resulted to face book sacking of an employee as stated in one of the newspapers, the employee forgot that the manager is one of his friends on face book and was telling another friend on how she hate her job and the Manager as well and called him a name 'pervy'. As a result of this act, she was sacked. Every one should be careful the way they behave outside work place because any thing can lead to a bad outcome if care is not taking at the work place.



This was an issue that has brought to light that most people fake their c vs. no matter the level. Just at the point where this fellow Patrick Imbardelli will join the board of directors he was discovered to have lied about his qualifications and ha admitted it as well by resigning immediately this was discovered. Though he was appreciated in the company and has impacted a lot in the organisation according to the report, it still did not erase the fact that he lied and claimed to have got the qualifications hat was not anywhere to be found. These issues should be taking a serious area of concentration in recruitment and checks should also be carried out


Selection - after a careful thinking on how the recruitment method has gone through, the consideration of selecting those who have the potential of doing the job as expected and can fit in the culture of the organisation. This will be considered through the behavioural and coordinating style of the individual who will be selected.

Selection according to Heery & Noon (2001).pg 320 explains that, it is the process of assessing job applicants using one of a variety of methods with the purpose of finding the most suitable person for the organisation. Arguments have been made according to D. Nickson (2007) that most times that the selection of staffs should be seen as an important aspect of HRM practise in organisations and needs to be considered effective if applicable. The use of various selection methods should be considered so as to get it the first time round before the go on cost problem by training more than required. He stated that the selection process could be two aspects namely

The organisation have the power in the process of selection

The selection criteria

It has been stated that every organisation have the power in the selection process and to an extent this is true because, the rules as in policy of the organisation has to be strictly followed and if the individual cannot comply with it , then they do not get the job.

The selection criteria is also very important because the person involved has to be fit for the job and job interaction is also to be put in consideration. The ability to work in teams will also be examined because it will go a long way to help. In most organisations team work has been considered as a vital aspect and has brought about job efficiency in most organisations.

Methods of selection could be:

Interview, the most popular

Psychometric testing


Assessment centre

Telephone screening

Application form

Self assessment

These methods mentioned above will be profitable for all organisations if applicable and it will be considered successful and consideration on fairness on candidates, cost effective, user friendly, and acceptable to both organisations as well. Must be reliable and valid


In this case study, it was stated that in (2002) as a major airline, easy jet is concerned in getting it right at the stage of recruitment especially pilots, and it is said to be one of the companies most expensive resources in terms of salary, training and career development. This was introduced in 1999 and has now been extended to the recruitment of cabin crew and call centre employees. In this study the pilots face a lot of challenges and help them to cope under pressure, ability to adhere to standard and technical knowledge. They are also accessed in leadership and decision-making criteria. In HRM practice recruitment and selection is been considered as an important aspect because that is the means of getting those who are fit and qualified and can also help the organisation in profiting and expanding which leads to competitive advantage against competitors.


According to J Mullins (2002) Organisational structure is the pattern of relationships among positions in the organisation and also members. The structure could be seen as a means of creating a command and a framework of how activities of the organisation can be planned, organised, and direct and controlled. The structure is said to define tasks and responsibilities in the organisation as well as work roles, relationship and channels of communication. This is very important in every organisation because the task, responsibility and authority will be clearly seen for a proper work guide and environment. The need for organisational structure review should always be a paramount thing in the organisation to ensure growth and development amongst employees.


British Gas by Richard V. Giodano, Chairman British Gas plc.

The decision taken by the government to introduce competition in the entire gas market in Great Britain has stimulated a rapid change in structure and regulation of the gas industry. The new systems and business practices had to be designed and implemented throughout our organisation and cultures and values which served the company well in the past and had to adapt to the company.

This is most times important for every organisation because it will specify the task and also reveal the responsibilities and will also monitor the activities, give accountability and it also provides the criteria for structural effectiveness. Structure, thought is not an end in itself but a means of improving organisational performance.


A four-stage training model by John Bratton & Jeff Gold (2007)

Identify training needs and specify objectives

Design activities

Implement activities

Evaluate activities

Training with regards to Armstrong (2009) is the use of systematic and planned instruction activities to promote learning. The approach can be summarized in the phase 'learner-based training'. This he said is one of several responses an organisation can undertake to promote learning. As Reynolds (2004) points out, training has a complementary role to play in accelerating learning. It should be reserved for situations that justify a more directed, expert-led approach rather than viewing it as a comprehensive and all- pervasive people development solution. The illustration also suggested that the conventional training model has a tendency to 'emphasise subject-specific knowledge, rather than trying to build core learning ability. Training as it is seen has a great impact in the organisation and the staffs that is trained is always efficient in their job and performance.


The effective training practice is seen to be using the systematic approached defined above with an emphasis on skills of analysis. In terms of the behaviour required, it should be clearly as a result of training and can be explained as on completing this training the participant will be able to identify the expected behaviour and provide the basis for evaluation, which is an essential element in the achievement of successful training.

Types of training given by Armstrong (2009) are listed below:

Personal skills

Training in organisation practices e.g., induction, health and safety, performance management, equal opportunity or managing diversity policy and practice

IT skills

Supervisors story

Manual skills, including modern apprenticeship

Management training

Interpersonal skills, e.g. leadership, team-building, group dynamics, neuro-linguistic programmes

In training and development, it is to an extent a way of developing an individual for a better fit in the organisation. It an employee is trained such individual is meant to develop in several area both practical and theory.

Personal development should be seen as carrying out a planning by individual with guidance, encouragement and help from their managers as required.

Training and development with Nickson (2007) now seek to emphasize adaptability, flexibility and continuous development to ensure that organisations can survive and compete in an ever more competitive environment. Training and development is not just for organisation but also for lifelong learning for individuals as well. Increasingly in the UK in the 1980s and 2990 there was an emerging consensus from government, policy makers and practitioners that training should be encouraged within organisations for greater good of the importance of training and the need to encourage it to foster an effectiveness in the organisation.


Delco-Remy trained its employees in participative management,it succeeded in differentiating itself from all competitors in the eyes of Honda and others. The successes of this training and resultant competitive advantage is described by Delco's Keith W. Wander:


has trained 'mechanics in service garages' (their servicers)throughout the United States in order that Mercedes can offer 24-lourservicing anywhere in the United States.


Offer extensive training programs to their parts suppliers in order to enhance the quality of their products (both them as well as the suppliers).

EXAMPLE 14.McDonald's

McDonald's uses its intensive training program at Hamburger University to ensure. that its franchisees or distributors run as efficiently as possible. Although training is also done in order to attain consistent quality, its competitive advantage from training is attained from a cost/efficiency thrust. Offers extensive training to their franchise owners (i e their distributors/servicers).


This company is a British company that has a number of holiday centres which are catering primarily for families. Majority of their workers are seasonal and they all work for a short period of time. Despite the high turnover of staff that they always have the opportunity to improve and no matter how short they stay with the company. As a result the drawing of the lip guidelines the company now has a structure which means that all employees have the opportunity to a personal development file with job description and aims, access to NVQs, access to funding for vocational training, assistance with professional equalisations and assessment of aims and goals and help achieving them.



AMANDA Scott, the then General Manager of the Copthorne Hotel in Glasgow, suggests that in many respects lip embodied what any good manager should be doing - investing in their people. A lot of criticism was also mentioned. Most companies who have attained this lip standard often already got goo HR system and procedures in place so gaining the award may simply be nothing more than a 'badging' process. This points out that the costly nature of lip accreditation could be particularly important for smaller companies who predominate in tourism and hospitality. The CIPD has come up with the total cost of £5000-£15000 depending on the size of the organisation and how much co


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