Introduction
The human resource department is the center of all the functions in a company. Without the involvement of which, a business cannot conduct its financial and operational processes effectively. Human resource management (HRM) in contemporary society is a procedure that uses the skills, capabilities, and knowledge of workers to realize organizational objectives (Hewett & Shantz, 2021). The human resource department has to be more focused on the benefits and needs of the staff, as it plays a significant role in the success of any organization. Furthermore, the HR function is principally concerned with how individuals are supervised within corporations, concentrating on policies and systems comprising training and development, recruitment, performance appraisal, and rewarding (Hewett & Shantz, 2021). Therefore, this paper aims to focus on the role of human resources in the contemporary business world.
Forces that Shape Human Resource Agenda
In the drastically changed commerce surrounding, the outdated business strategy may not guarantee the stability of companies. Therefore, to address changes comprising innovation, climate shifts, competition, globalization, social equity, and demographics, businesses should assess their bottom line of profit and loss accounts. They also need to familiarize themselves with the environmental and social roles and ensure their utilization of limited resources is maintained. The human resource of establishments is, therefore, shaped by models, strategies, insights, and resolutions to back performance and shareholders’ expectations.
Models of Human Resource Function
Human resource (HR) models help to illustrate the role of HR in a business. For instance, the standard causal concept of HRM shows a casual channel that starts with the corporate strategy and concludes through the HR procedures, with enhanced financial performance. The concept, therefore, shows how the human resource activities that are aligned with the organizational approach result in commerce performance. According to this ideal, HR is only effective if its plan is inclined with the company’s tactic (Hewett & Shantz, 2021). Hence the HR policy is derived from the overall firm’s strategy, and their practices, such as compensation, recruitment, career development, and appraisal, should follow the process. Consequently, the methods will result in specific outcomes, including quality output, engagement, and employee commitment.
Similarly, the 8-box model shows different external and internal issues that impact the effectiveness of what is done in the human resource department. The external aspects that influence how HR is conducted include the external marketplace context, target population setting, and overall organizational framework (Sullivan & Al Ariss, 2021). For instance, if there is a deficiency of particular skills in the market, this impacts how a company conducts outsourcing, hiring, and employment, equated to when there is an abundance of qualified personnel. Likewise, the institutional framework is also transformed since legislation influences how HR managers perform their duties (Sullivan & Al Ariss, 2021). The primary procedure in the middle commences with the confirmation.
Moreover, the HR value chain model is based on the work of Paauwe and Richardson and establishes a nuance on other ideals concerning how human resources functions. According to the HR value chain, every task manager can be categorized into two classifications comprising HRM results and HRM activities. The HRM actions are daily events, including employee compensation, recruitment, career development and training, and succession planning (Sullivan & Al Ariss, 2021). These activities are usually evaluated using the HR metric, particularly productivity metrics. On the contrary, HRM outcomes are the objectives the HR administrator’s purpose of achieving with the HRM activities. For instance, a company recruits and compensates its employees to realize specific outcomes, such as worker motivation, retention, satisfaction, and presence (Sullivan & Al Ariss, 2021). If a company concentrates on measuring HRM activities, it will automatically reduce costs, thus maximizing productivity.
Human Resource Strategies
The overarching strategy plays a significant role in the sharing of HR agendas, business objectives, and stakeholders’ expectations. It describes the overall intentions of the company regarding how the staff should be managed and developed and the procedures to be undertaken to certify that the business attracts and retain the employees it requires (De Mauro, Greco, Grimaldi, & Ritala, 2018). Furthermore, the strategy ensures that the HR department understands the importance of employee motivation and engagement to improve productivity, thus realizing company objectives and shareholders’ expectations.
The overarching strategies are usually expressed as broad-brush declarations of purpose and aims that set the scene for more particular approaches. The models are involved with general business productivity and realizing shareholders’ expectations (De Mauro et al., 2018). It ensures a company accomplishes human resource advantage over its competitors through recruiting better workers in the enterprise with the improved procedure, developing exceptional performance work processes, and building a suitable work environment.
Additionally, the strategies ensure that HR improves productivity and realizes the shareholder’s goals through managing goals, targets and benchmarks, sales performance, and recruitment. The overarching strategies help in certifying that the workers are performing their tasks as expected and will further influence significant changes within the business, thus increasing the overall business revenue (De Mauro et al., 2018). ADNOC’s HR incorporated strategy focuses on guaranteeing that from every angle, the staff assesses the elements of salary management, performance, benefits, and career improvement and how the aspects are consistent and linked (De Mauro et al., 2018). The approach has impacted the operations of the company and influenced its improved performance and competitive advantage in the oil and gas business industry.
Tools for Analyzing the Business Environment
Porter’s five forces and PESTLE are implements that organizations can utilize to enhance their competitive places in the marketplace. Porter’s five forces assess where the authority reclines in a competitive industry. On the contrary, PESTLE detects how several macro-conservational aspects may influence a business and its competitive stand-up. Porter’s forces are, therefore, an investigative model that is employed to help detect the organization of commerce and to aid corporations in deciding their economic approaches (Hardjakusumah, Silalahi, & Khairi, 2017). As the name suggests, there are five external factors that make up the model. First, a significantly high point of competition denotes the influence of competing organizations declines. When rivalry is low, firms can perform needed actions to boost their revenues. Second, new entrants into the marketplace would mean that a business’ power is also reduced (Hardjakusumah et al., 2017). Numerous establishments choose to purpose in a marketplace and trade where there are fewer companies. Third, the seller authority investigates how the sellers can utilize their authority to surge the costs of merchandise and services. Therefore, fewer dealers in the marketplace would mean that they possess supplementary authority. Fourth, when customers hold more negotiating influence, they are able to influence the pricing of commodities and amenities, thus reducing them (Hardjakusumah et al., 2017). Finally, the risk of substitute merchandise and services from a competing company can certainly impact the profitability of a firm.
Besides, PESTLE examination positions for governmental, monetary, sociocultural, technological, lawful, and ecological aspects that influence the operation of a business. The model examines the factors in an economy and evaluates how those issues impact the consumer. Political factors include government policy and legislative alterations that influence the economy of a marketplace, such as employment laws and tax regulations. Likewise, economic aspects comprise inflation, recessions, supply and demand, and exchange rates (Aaldering, Leker, & Song, 2018). Sociocultural issues include consumer lifestyle, demography, and culture, which affect their choices and preferences. The technological dynamics, however, are changes in technology, how innovations are utilized in various industries and sectors, and research. Moreover, legal influences are the aspects that impact businesses, such as copyright acts, consumer regulations, and health and safety laws. Finally, environmental factors have less to do with the actual business operations; they comprise pollution, climate, weather, and environment-linked decrees.
PESTLE analysis enables administrators, financial, and marketing professionals to assess various dynamics when making decisions about the business’ services and commodities. So the director of an organization that employs PESTLE analysis should concentrate on the social factors of consumer behavior. The approach may, however, include measuring clients’ demographics, buying trends, and culture (Stroe, 2017). Similarly, the managers can choose to assess the environment and how it affects consumer reach. Adverse climatic conditions, how consumers perceive sustainability, and environmental regulations at state and local levels of authority can further affect the future of a company (Stroe, 2017). The outcomes of the PESTLE study allow the business to make particular decisions when planning the organization’s future, from how the trademark should be presented to any transformations within the structure of the corporation’s organization to the creation of new commodities and services.
Factors that Influence an Organization’s Business and HR Functions
The PESTLE analysis model can be employed to help define the variety of external features that influence a business’s operations and its human resource functions. For instance, political aspects impact the procedures of an establishment since industries are administrated by the changes that are presented by the European Union (EU), government executives, and business societies that control segments of trade (Kremer, 2018). The HR department is accountable for ensuring an organization stays amenable to the alterations and acts. Besides, the economic climate of a marketplace has a significant influence on how establishments function. It determines exchange and interest rates, overall demand, inflation, and employment degree. Multinational standards have further influenced competition, and numerous corporations have been established in the United Kingdom and the United States. The enterprises are compelled to cut costs and subcontract most of their functions to overseas markets where employment charges are low (Kremer, 2018). Besides, social influences play a central part in the modern staff. An aging population, immigrant employees, and changing family frameworks are some of the concerns impacting business operations and human resource functions. Technological innovations have a continuous external impact on businesses. New systems and equipment can enhance the productivity of a company but can also result in downsizing the employees, thus saving money and boosting the revenue of the corporation. Human resources should help in this procedure by examining where the redundancies should be made.
Conversely, companies are expected to comply with the regulations, statutes, and rules. Human resource divisions are facing pressure to update organization policies and processes to remain legally amenable. These guidelines apply to all sectors of HR, comprising recruitment, career development, training, termination, and compensation. Hefty penalties can be levied if companies are in breach of the specified codes (Kremer, 2018). Finally, dynamics that can impact the environment are being ethical and sustainable. For instance, concerns such as climate shift, recycling of used commodities, and the disposal of factory wastes. Companies should have regard for transformations in the environment and their own processes, which could impact the environment.
Despite companies experiencing external pressures that impact their businesses and HR operations, there are internal influences that also affect the sectors in various ways. For instance, corporate goals such as an objective of cost reduction lead to the necessity for delayering, redundancies, and additional restructuring (Patel et al., 2019). Similarly, operational strategies that involve the introduction of new innovations, procedures, and other systems require new employee training and a reduction in the workforce population. The issue can significantly alter the processes of an organization as HR will be required to invest additional funds in training and recruitment, thus increasing operational expenses. Marketing tactics are also altered during new product development and introduction to the marketplace. The process requires alterations to the business structure and the hiring of new sales personnel (Patel et al., 2019). Finally, financial approaches also significantly influence a corporation’s business and its HR functions. For instance, the decision to minimize expenses through outsourcing training will result in transformations in employee training initiatives.
Key Stages in Strategy Formulation and Execution
Strategy creation is where an organization defines where it presently stands and its future, and the operations that will drive them to the desired marketplace position. An operative approach entails an organization establishing realistic and clear goals, allowing room for flexibility. Strategy exists at various levels of a corporation. For instance, the corporate approach entails achieving stakeholders’ expectations which is the overall objective of a corporation (Harrison & Bazzy, 2017). The strategy is an outline in decision-making for a business and its procedures. Equally, the competitive method describes how the unit can attain a competitive edge over its competitors. The operational approach refers to how different segments of the corporation function to convey the commercial and trade unit tactics (Harrison & Bazzy, 2017). The policy sets out the planning and utilization of workers, procedures, and resources. For instance, strategies that firms can pursue to achieve competitive advantage are horizontal and vertical integration. Vertical incorporation is when enterprises acquire organizations upstream or downstream from their current marketplace. Conversely, horizontal amalgamation is when entities merge with other organizations in parallel markets.
Strategy formulation, therefore, requires a set of phases for effective execution. The core focus of policy conception is distinguishing the firm methods and undertakings, but the effort is also set to the resources required to create an understanding. According to business professionals, the resource-centered perception is from the view of Penrose, who determined that the business is a managerial firm and consolidation of productive resources. The scholar perceived resources as a package of potential services (Alharthy, Rashid, Pagliari, & Khan, 2017). Vision and mission are the foundation on which the plan is organized since they are the principal standards and fundamental tenacities. Besides, the principles of a firm and the policy should align, relating to the values of the workers, stockholders, and philosophy of the corporation. The HR managers should further set specific, measurable, achievable, realistic, and timely (SMART) objectives (Alharthy et al., 2017). They are expected to conduct internal and external environmental assessments using the SWOT model to examine internal weaknesses and strengths and external risks and opportunities.
Besides, an analysis of the existing business model and strategy should be conducted using a gap assessment to detect the opening between prevailing policy and the future surrounding. An analysis of the existing managerial culture should be done and a determination made on the expected culture for successful execution of the policy. However, alterations made to the approach should be aligned to the prospect stance and principles of the industry. The HR managers should also outline the competitive tactic by creating the best functional and corporate policies for realizing objectives and attaining competitive advantage (Micheli & Mura, 2017). Furthermore, the execution of the strategy is done by implementing the tactical plan to realize the desired outcomes. The procedure entails tasks such as company structure, resource organization, systems, and change monitoring methods (Micheli & Mura, 2017). Finally, strategy evaluation can be tracked at three stages, comprising feasibility, sustainability, and acceptability. The execution requires the HR managers to monitor and identify the areas that need necessary updates.
McKinsey’s 7S model can be employed in the strategy formulation and execution process. The concept was developed in 1980, and it is a strategic assessment concept that examines the seven vital internal elements, comprising systems, shared values, approach, structure, employee, style, and skills (Srivastava, 2017). The concept employed by managers should be suitable for business needs. For instance, IKEA utilizes the McKinsey 7S model for its approach to tactical management. The concept displays how single elements of a form can be designed to boost the general success of the business (Srivastava, 2017). These elements are classified as hard and soft, and McKinsey’s model emphasizes the strong connection between fundamentals, such that a transformation in one influences changes in others.
Human Resource Contribution to Business Ethics and Organizational Accountability
Conventionally, establishments were likely to be apprehensive of the bottom line. However, they presently consider expansive apprehensions into deliberation and ensure corporate social responsibilities (CSR). The businesses should execute moral strategies to observe the lawful and community beliefs, such as Human rights principles. From the commercial viewpoint, principles are intended for ethical standards and standards that define the actions and decision-making of the firm at all stages and associations with all stockholders (Mishra, 2017). The HR encourages a tradition conducive to the moral values of the organization. It can further entrench a principled culture through various approaches.
First, legislation impacts human resources’ involvement in ethics by enacting duties, obligations, and moral pressure where they are anticipated to perform ethically but not compelled by acts. They have a moral and ethical duty when supervising employees’ confidential information considering the update on the General Data Protection Regulation enacted in May 2018, which restricts the belief of agreement in a descriptive contract (Mishra, 2017). Second, concerns revolving around gender equity usually raise queries concerning the ethics and accountability of HR and the company. The equality law of 2010 forbids discrimination between male and female employees in relation to salaries and working conditions. Finally, a merger and acquisition can increase difficulties for human resources and a business. Therefore, HR should ensure that they realize the legal obligations. They are further responsible for certifying the treatment of both workers and the whole stakeholders are inclined to ethical standards of the firm.
Evaluation of Business Performance
Lewin’s model is a traditional tool of change that is recognized by three phases in change administrations. The stages comprise unfreezing, movement, and refreezing. Organizations resolve into accustomed practices and are averse to transformation even when beneficial. Shifting from the frozen stage entails unfreezing, which can be achieved through push methods to get them moving and then pull approaches to make them successful (Macke & Genari, 2019). Companies in the state of unfreezing are referred to as change accustomed. The transition phase is a process, though not simple but is distinct to every firm. It is therefore essential to offer employee training, counseling, and support during this time and effective practicing of leadership. The final stage is to refreeze, which is aimed at achieving innovative stability and order. The procedure is normally slow and has no clear boundaries to define its end.
Conversely, benchmarking is a planning tool that a company uses to contrast its operations against leading players in the same industry and top organizations in distinct markets and recognize effective practice processes. Benchmarking is a straightforward method for a firm to assess its procedures. Deficiencies and gaps can be detected by comparison with better-performing corporations. It can be functional for operations, procedures, and approaches. However, the benefit of benchmarking is that it presents focuses on zones that should be given exceptional consideration and offer quick outcomes and enhancements if effectively managed. The limitation of the technique is that it identifies divisions that need upgrading but does not deliver resolution and lacks improvement (Macke & Genari, 2019). Furthermore, it develops information that does not clarify how it was achieved. The benchmarking tool, however, provides methods of working and new innovations. Comparisons made with rival players in the industry are thus more relevant than contrasting the company’s own previous productivity.
Finally, the balanced scorecard (BSC) is a tool that endeavors to associate qualitative and measurable performance pointers, thus giving a more inclusive understanding of the company’s effectiveness. It can be utilized to support stockholders’ predictions with commercial performance to achieve strategic goals. The method is employed to measure four specific areas of measurement comprising consumer, financial, training and development, and internal trade processes (Macke & Genari, 2019). In all of these zones, dynamic mechanisms should be identified, and a technique to assess their prevailing level and any viewpoint established. Consequently, when an extent designates nonconformity from the objective, resolution practices can be invented to resolve such concerns. The BSC does not offer fast outcomes, and it requires time and careful implementation. It further needs a strong comprehensive strategy to become successful.
Therefore, for change management to become successful, the human resource department plays a significant role. They should be engaged in the preliminary project phase and recognize and train the administrators and employees needed for structural transformation. The HR function needs to examine the influence of the change on the company and shareholders and offer reassurance (Macke & Genari, 2019). They should communicate to all the areas affected by the change since the approach is vital in successful transformation implementation. The HR is further expected to measure the power of change agenda on human resources, workforce response, staff renewal rate, and training. They usually are responsible for reassessing working practices and procedures and identifying where costs can be minimized through takeovers and mergers. Finally, they evaluate the employee profile, skills, and terms and conditions of employment. Despite the change being prospective, personnel responding to the planned transformation will contrast as each worker will be in a distinctive position regarding the change since they can perceive it as negative or positive (Macke & Genari, 2019). The HR role in addressing this issue is to develop a corporate culture that accepts innovation, and appropriate communication, ensuring workforce involvement in change, human resource development interventions, and handling of anticipations and conflict.
Sources of Contextual and Business Statistics used for HR Planning Procedure
Human resource metrics are functional processes tackling how effective, efficient, and influential a company’s HR functions are formed. The HR metrics can comprise numerous procedures established to evaluate internal and external quantifiable concerns. They also present the opportunity to investigate soft skills encompassed by the HR processes. Soft skills are the capability to socialize with other individuals in the organization, willingness to offer exceptional performance, and integrity (Blazquez & Domenech, 2018). Statistics gathered can be secondary or primary, quantifiable or qualitative. Primary information is collected particularly for the zone of research in which it has been organized. In contrast, secondary records are information that has been formally investigated and is used to equate against the current statistics. Scholars such as Bryman and Bell conclude that qualitative data is commonly created around opinions and suggestions rather than a mixture and inspection of numeric (Blazquez & Domenech, 2018). Measurable evidence usually includes statistics and can be examined through numerical examination software.
Surveys: Qualitative Data
Questionnaires are gathered linking to the study subject. Questions should be clear and precise and aimed at the theme being analyzed. Despite being challenging to ask in-depth queries and having significantly low response rates, the method is cheap and suitable. Surveys are usually employed to assess workers’ views and fulfillment, culture, and commitment (Blazquez & Domenech, 2018). After collating and examining the statistics, HR should have an impression of how operational the company’s existing strategies are for staff commitment and contentment and what actions need to be taken for development. Upon recognizing expenses for upgrading, such as the absence of training, HR will create cross-functional groups to execute the policies of action and offer support during the procedure to management.
Interviews: Qualitative Statistics
Interviews are usually conducted in a one-on-one setting or in team discussions. Questions are normally open-ended and casual and should, however, relate to the study being analyzed. Interviews can be beneficial when the examination is needed to inspect concerns in point, specifically when performance administration is being investigated. Once the attainment actions have been decided, statistics need to be assessed to appreciate how operational the existing enactment supervision structure is and expanses for upgrading (Blazquez & Domenech, 2018). HR should enquire with the senior administration on activities to undertake once the outcomes have been scrutinized. After deliberations with both chief and middle directors and employees on how developments can be made, an action strategy should be executed. It is, however, imperative management and HR monitor the planned action (Blazquez & Domenech, 2018). Investment in routine administration pays bonuses by comprehending purposes, such as employee commitment and preservation, developing a global managerial network, and improved workers’ training.
Employee Turnover: Quantitative Measurement
Companies should observe turnover due to the performance, budget, and retaining experienced workers. The issues around turnover can be recognized by utilizing examination, benchmarking, and need analysis. However, to realize useful supplementary outcomes, these metrics should be gathered both within and externally. After organizing and studying statistics, it should be resolute to which degree there is a problem with turnover and what tactics will solve the concerns. Furthermore, metrics display the number of staff that exit the organization in the period studied (De Mauro, Greco, Grimaldi, & Ritala, 2018). The outcomes should display trends and offer data on aspects influencing employee exit. HR and directors should then decide what strategies to adopt considering the issue. It is further vital to monitor and evaluate to understand the approach’s importance equated to the cost. The effective actions to minimize turnover are compensation, training and career development, and teambuilding drills. Benchmarking can be utilized as a business instrument for detecting the openings or enhancements needed to stay modest (De Mauro et al., 2018). The understandings gained by benchmarking against competitors include salary and rewards.
Absenteeism: Quantitative Evaluation
Increased absence rates are an indication of staff discontent and can result in employees quitting. Qualitative information gathered for absenteeism is valuable for a company since sickness, particularly long-lasting absence, is expensive. Variations between various zones in the corporation can be indicative of difficulties. Statistics can display trends and patterns in truancy, which should be recognized (De Mauro et al., 2018). Shared procedures are used to recognize deficiency according to Healthy Working Lives. For instance, to detect the frequency of absence, the common measures the HR can utilize are the overall amount of absenteeism spells within a specific time and regular spells of nonattendance per personnel in a stated period (De Mauro et al., 2018). Conversely, the length of absence can be evaluated by the normal sum of days of absence per nonappearance spell and absence per worker at a particular time.
However, where an issue has been identified to exist, absenteeism and wellness approaches can be prearranged by the use of; return to work discussions, employees’ well-being, creation of open culture, and employment of trigger points. The key to business information is that it is connected and should be aligned to the general approach of the company (De Mauro et al., 2018). Quantitative statistics are independent and present a specific and accurate analysis. In contrast, qualitative data is subjective, and unless consistency is used in its assortment, it can provide deceptive outcomes.
Conclusion
It is essential to understand the external aspects which have an influence on the company and the HR department. These can be recognized and examined for opportunities and threats. The internal and external dynamics can have substantial impacts on a business strategy and thus should be considered during all tactical planning. Furthermore, the HR department has a vital role in all parts of the corporation’s strategy. The HR organization should be such that it provides effective approaches, understandings, and resolutions, to suit the business and shareholders’ objectives. The structures should be appropriate to help create organizational tactics and adopt them. Moreover, to execute the necessary strategy transformations, suitable knowledge of the existing enterprise performance is required. Therefore, the HR division plays a critical part in the efficiency of a business, and its processes should be evaluated to appreciate how they can be developed to profit for the purposes of a corporation.
Appendices
PESTLE Analysis of ADNOC Company
SWOT analysis of ADNOC Oil and Gas Company
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