Business Issues and the Contexts of Human Resources


Contents

Abstract

Introduction

1.1:  Contemporary external factors that may impact on the business and the HR function

2.1: Forces that are currently shaping the HR agenda

2.2: Comparison of strengths and weaknesses of business tools for analysing the business environment

2.3: Key stages of organisation strategy formulation and implementation and HR’s involvement

2.4: HR’s contribution to business ethics and organisational accountability

3.1: How effective are change management and business planning tools and techniques and HR’s role in change management

3.2: Sources of business data used for HR planning purposes

Conclusions and Recommendations

References

Appendices

Appendix 1: SWOT Analysis

Appendix 2: PESTLE Analysis

Appendix 3: Porter’s Five Forces

Appendix 4: McKinseys 7S Model: The seven elements

Appendix 5: How HR can embed an ethical culture

Appendix 6: The method of benchmarking steps

 

 

Abstract

Key contemporary business issues and main external factors affecting the organisation and its impact on Human Resources (HR).

 

  • External factors – political, economic, social, technological, legal, environmental, competition and globalisation.
  • Impact on HR – remain compliant with the law, assist with changes in the economy, recruitment and retention.

How organisational and HR strategies and practices are shaped and develop.

  • Forces that are currently shaping the HR agenda – labour market, supply and demand, employment law, skill shortages, social inequality, competition, technology, climate change and demographics.

 

  • Different models of the HR function – Ulrich’s Four Role Model, HR Consultants and HR Generalists.
  • Strategies and Insights – flexibility in terms and conditions/contracts, high commitment working practices and building a culture that embraces change.

Business Analysis Tools: SWOT, PESTLE and Porter’s Five Forces.

Key stages in strategy formulation: Define the competitive strategy

Implement the strategies

Strategy evaluation

Strategic analytical model used for change management: McKinsey 7S Model

Role of HR in Strategy – help formulate and implement change management, environmental scanning, prepare and organise the teams, prepare employees for change and communicate the changes.

  • Role of HR in ethics and accountability – senior HR central in helping the organisation devise, implement and monitor all policies and procedures related to ethics.

Business performance evaluation: Traditional and modern indicators – Lewin’s Change Model, Benchmarking and Balanced Scorecard.

HR’s in role in change management – assess impact on organisation and measure impact of change.

Business data used for HR planning purpose:  Qualitative datasurveys and interviews.

Quantitative data – employee turnover and absenteeism.

Introduction

This report discusses business issues and the contexts of human resources by:

  • Identifying the key contemporary business issues and main external factors affecting the organisation and the impact this has on HR.
  • Explaining how organisational and HR strategies and practices are shaped and developed.
  • Identifying and responding to changes in the business environment.

1.1:  Contemporary external factors that may impact on the business and the HR function

 

A recognised tool used to help define the range of factors that can have an impact on an organisations business and its Human Resources (HR) function is the PESTLE Analysis tool (Figure 1).

mot_010_pestle-analysis-diagram1.png

Figure 1: Pestle Analysis (GMPJ Consulting, 2016)

Political

Organisations are governed by changes that are introduced by the government, the European Union (EU), trade union and other bodies which regulate sectors of business. The HR department is responsible for ensuring an organisation remains compliant with changing regulations.

 

Economic Conditions

The economic climate has a big impact on how organisations operate. It determines rates of interest, inflation, exchange rate, employment levels, general demand etc. Globalisation has brought with it increased competition and many UK based organisations have had to cut costs and outsource much of their work to countries overseas as labour costs are lower. HR would assist management in being aware of what’s happening in the current market and being prepared to cope with any changes in the economy.

Social

Social factors play an integral part in the current workforce. An ageing population, changing family structures, immigrant workers are just some of the issues that HR need to address when taking into account how to attract new candidates and how to retain existing employees.

 

 

Technological Advancements

Developments in technology have a continuing external effect on organisations. New systems and machinery can improve the performance of a business, but can also lead to downsizing the workforce and in doing so save money and increase the profit of an organisation. HR would assist in this process by looking at where the redundancies would be made.

 

Legal

Organisations must comply with all rules, regulations and statutes. HR departments are under constant pressure to update company policies and procedures to stay legally compliant. These regulations apply to all areas of HR, including hiring, training, compensation, termination, etc. Heavy fines can be imposed if companies are found to be in breach of regulations.

 

Environmental

Factors that could affect the environment are being sustainable and ethical. For example, issues such as recycling of used products, climate change and the disposal of industrial waste. Businesses must have regard to changes in the environment and its own practices which could affect the environment.

(Friedman, 2013)

2.1: Forces that are currently shaping the HR agenda

In a radically transformed business environment, the traditional business model may not ensure the sustainability of organisations. To meet challenges such as globalisation, climate change, technology, competition, social inequality and demographics, organisations need to look beyond the bottom line of the profit and loss account. They need to be aware of their social and environmental responsibilities and ensure their use of scarce resources is sustainable.

HR should anticipate these changes and devise appropriate change management strategies. To support in the delivery of an organisation’s strategy and objectives, HR strategy and activities must be aligned with those of the business and its stakeholders. HR must consider the expectations of stakeholders’ such as, employees, managers, shareholders etc.

Generations X and Y, Traditionalists and Baby Boomers are cohorts which have different behaviours, values and expectations. An organisation has to understand them and HR need to put strategies in place to engage them.

Increased competition means uncertainty and unpredictability, HR are unable to plan ahead beyond 3 to 4 years, previously they could strategically plan 10 to 20 years. Organisations have had to become more agile, regularly having to change, upsizing, downsizing, outsourcing, offshoring and mergers and acquisitions. Policies and practices of organisations need to be more agile and able to respond more rapidly than its competitors to changing circumstances in the business environment and to meet stakeholder expectations.

Central to HR practice is flexibility in terms and conditions of offers of employment. Short-term contracts are more common, this avoids making redundancies during change. There is an increase in sub-contracting, self-employed professionals, agency workers and zero-hour contracts. This has changed the way HR traditionally employed people on permanent, full time contracts, ‘job for life’.

HR are increasingly associated with the development of approaches to the management of performance, by adopting ‘high commitment working practices’. These can be in the form of performance and profit related pay, accelerated management development programmes, employer branding and employee engagement.

The success of organisational change (cultural and structural) depends on how employees are managed. Change can cause conflict, HR plays a major role in managing this by building a culture which embraces change.

Increased competition affects the way the HR function organises itself and approaches objectives. Large and private sector companies being privately owned will be concentrating on revenue generation and will have a large HR function and adopt styles similar to the Ulrich Model (1998). This will typically include a HR shared service centre, which manages all the daily ‘transactional’ services across an organisation. There will be a team of HR specialists, in areas such as reward and learning and development. The change agents are responsible for ensuring the organisations visions and values are followed. The HR business partners work closely with leaders and line managers by assisting and influencing business strategy and implementation. There are many benefits with this function such as, reduction in costs and improving the quality of customer service.

Figure 2: Ulrich’s Four-Role Model (Mohd, 2011)

Small and medium sized enterprise (SMEs) HR function, typically consists of a HR generalist working alongside operational management. HR consultants can be brought in to both large and small organisations to deal with specific projects and leave once completed. They bring with them a wealth of knowledge and expertise, having worked for multiple organisations.

(Buahene, 2012)

(CIPD, 2012)

(CIPD, 2017)

2.2: Comparison of strengths and weaknesses of business tools for analysing the business environment

Three tools for analysing the business environment are SWOT, PESTLE and Porter’s Five Forces.

SWOT Analysis helps an organisation to comprehend the strengths, weaknesses, opportunities and threats, internally and externally (appendix 1).

PESTLE Analysis examines the external ‘macro environment’ in which a business exists, these factors are, political, social, technological, legal and environmental (appendix 2).

Porter’s Five Forces (1979) is a tool used to analyse the competitive environment of your business and show the potential profitability of your strategy. The five forces are:

  • Competitive rivalry
  • Threat of substitution
  • Threat of new entry
  • Buyer power
  • Supplier power (appendix 3)

SWOT, PESTLE and Porter’s Five Forces analysis tools are all planning methods. They are very useful for organisations to gain insights, in order to successfully execute projects. SWOT and PESTLE are simple and easy to use frameworks, whereas Porters Five Forces is more complex and requires a broader in-depth analysis.

PESTLE and Porter’s Five Forces only consider external factors in their analysis, whereas SWOT will consider both internal and external factors. SWOT can be used to complement a PESTLE or Porter’s Five Forces analysis to highlight any strengths or weaknesses of the findings, neither PESTLE nor Porter’s Five Forces can be applied to SWOT.

Porter’s Five Forces and PESTLE are both able to determine the implications of entering a new industry or market. SWOT is not able to provide this information, although it gathers information it doesn’t offer solutions. Porter’s Five Forces and PESTLE both help companies develop their competitive strategies. Porter’s Five Forces examines where the power lies in a competitive situation, whereas PESTLE identifies how various external factors might affect an organisation in its competitive position.

Since Porters Five Forces was developed in the late 1970s, markets have changed to a great degree and the rate of change has increased markedly. As a result, without regular updates Porters model quickly becomes outdated. This does not affect either PESTLE or SWOT because they do not require any prior assumptions about the market.

All three analysis tools discussed, have their strengths and weaknesses and offer solutions to an organisations strategy. Although Porter’s Five Forces and PESTLE can be strengthened by the application of a SWOT analysis.

(Downey, 2007)

(Mindtools, 2018)

2.3: Key stages of organisation strategy formulation and implementation and HR’s involvement

 

There are three alternative approaches for strategy formulation:

  1. Rational Approach, commonly seen as the ‘classical’ approach.

Plan of action is determined by the senior managers, who monitor the external and internal environments.

  1. Emergent Strategies, they are incremental and emerge over time as and when the organisation needs to respond to changing circumstances. These are not planned top-down, but more trial and error.
  1. Symbolic Approach, organisations continue with business as usual, only trying different approaches if required and success is down to luck rather than judgement.

(Taylor and Woodhams, 2016)

Strategy formulation is where an organisation determines where it is now and where it wants to be in the future and the process by which it can get there. Effective strategy requires an organisation to set clear and realistic objectives, allowing for some flexibility.

(Study.com, 2017)

Strategy exists at different levels of a business:

Corporate Strategy concerns the overall purpose and scope of the organisation, which is to meet the stakeholder expectations. It will act as a blueprint in decision-making for the whole of the business.

 

Competitive Strategy setshow theorganisation can compete successfully, by gaining advantage in their market over their competitors.

 

Operational Strategy is how different sectors of the business work to deliver the corporate and business unit strategies. It will set out the planning and use of employees, processes and resources.

(Riley, 2017)

An example of strategies that organisations may wish to pursue to gain competitive advantage are vertical or horizontal integration. Horizontal integration, where companies merge with other companies in a similar market. Vertical integration, when companies acquire businesses upstream or downstream from their existing market.

Strategy formulation requires a defined set of steps for effective implementation (figure 3):

Figure 3: Strategic Planning Process (FRG, 2016)

McKinsey 7S model developed in the 1980s, is a strategic analytical tool which looks at seven key internal elements: strategy, structure, systems, shared values, style, staff and skills (appendix 4). Using this model, organisations can see if their objectives are aligned and being achieved.

Figure 4: McKinsey 7S Model (Jurevicius, 2013)

The model used must be best suited to the business needs. IKEA use the McKinsey 7S model for their approach to strategic management. This model shows how individual elements of an organisation can be aligned to increase the overall effectiveness. These elements are categorised as hard or soft (figure 4). The model stresses the strong links between elements, such that a change in one causes change in others.

(Dudovskiy, 2017)

The main focus of strategy formulation is identifying the organisations missions and strategies, but attention is also given to the resources required to make it a success. According to Armstrong (p.32, 2011) the resource-based view is from the ideas of Penrose (1959) who wrote the firm is “an administrative organisation and a collection of productive resources and saw resources as a ‘bundle of potential services’.”

Vision and mission are the foundation upon which the strategy will be built, these being the core values and core purposes.

Values of an organisation and the strategic plan should align, taking into account the values of the members, stakeholders and culture of the organisation.

Objectives should be SMART (Specific, Measurable, Achievable, Realistic, Timely).

Internal and external environmental scans using a SWOT analysis, to assess internal strengths and weaknesses and external opportunities and threats.

Analyse existing strategies and business model by using a gap analysis to identifythe gapbetween current strategy and the future environment. An evaluation of the current organisational culture must be carried out and a determination made about the future culture required for successful implementation of the strategy. Any differences need to be changed to align with the future ethical stance and beliefs of the business.

Define the competitive strategy by formulating the best corporate and functional strategies for achieving goals and gaining competitive advantage.

 

Implement strategies by actioning the strategic plan and then achieving the desired results, this involves tasks such as resource planning, organisational structure, systems and change management techniques.

 

Strategy Evaluation can be monitored at three levels, suitability, acceptability and feasibility. Implementation needs to be monitored and where necessary revised or new strategies developed.

(Kew and Stredwick, 2010)

The role of HR at the highest level in strategy is to:

  • Assist senior management to formulate and implement change management
  • Research internal environmental strengths and weaknesses and benchmark these against their competitors, as well as other environment scanning techniques.
  • Prepare and organise the teams that will carry out the identification and analysis of any problems, providing any training necessary.
  • Have an understanding of the culture of the organisation and therefore are able to develop a shared vision.
  • Help build a consensual culture by appointing change champions, to increase levels of employee engagement during this process.

All through this process it’s important for HR to communicate changes to be implemented throughout the organisation and help staff overcome resistance by creating a culture that embraces change.

2.4: HR’s contribution to business ethics and organisational accountability

Kew and Stredwick (2010, p.351) note that Billington (2003), identifies three different approaches to ethics:

Absolutism. Ethics are underpinned by absolute values, which apply in all societies and all situations.

Relativism. Ethics depends on the situation and on the cultural mores prevalent at a particular time and place.

Utilitarianism. As Jeremy Bentham put it in the early 19th century, ‘the good of the greatest number is a criterion of right or wrong’.

Traditionally businesses were expected to be concerned with only the bottom line. Nowadays, they take wider concerns into consideration and they have corporate social responsibilities (CSR). Organisations have started reported the triple bottom line. Organisations need to adopt ethical policies to comply with legal and social expectations e.g., Human Rights Act (1998). In the corporate sense, ethics are a set of moral principles and values that determine the activities and decision making of the organisation at all levels and interactions with all stakeholders. Kew and Stredwick (2010, p.361) quote “values underpin ethics and the values of an organisation underpin its business ethics”.

HR devise, implement and monitor all policies and procedures related to ethics. They promote a culture conducive to the moral values of the business. HR can embed an ethical culture by many approaches (appendix 5).

Legislation affects HRs contribution to ethics by imposing legal responsibilities, duties and ethical coercion where they are expected to act ethically, but not forced by law. They have a moral and ethical duty when handling employees’ personal data e.g., an update of the General Data Protection Regulation (2016/679 EU) in May 2018 further restricts the assumption of consent in a typical contract.

Issues surrounding gender equality raise questions about ethics and accountability for HR and the organisation. The Equality Act 2010, prohibits discrimination between men and women in terms of pay and conditions of employment. Companies may be complying fully with legislation but could still be held accountable e.g., if there is a gender pay gap.

A merger or acquisition can raise hurdles for HR and the organisation. HR must ensure that they meet the legal obligations, beyond this they also have a duty to ensure the treatment of both employees and the wider stakeholders aligns with ethical values of the organisation.

(XPertHR, 2017)

3.1: How effective are change management and business planning tools and techniques and HR’s role in change management

Transitional Model – Lewin (1951)

In the 1950s Lewin identified a classic model of change, which identified three stages in change management:

  • Unfreezing – preparing for change, convince those involved there is a need for change
  • Movement – taking the necessary action to encourage new behaviour patterns
  • Refreezing – embedding new ways of working into the organisation

People settle into familiar routines and are reluctant to change even when beneficial. Moving from this frozen state requires unfreezing, which may be achieved by push methods to get them moving and then pull methods to keep them going. People in the stage of unfreezing are described as ‘change ready’.

The transition stage (movement) is a journey, not a simple step and is different for everyone. It’s important to provide coaching, counselling and support during this period, as well as strong leadership.

The final step is to ‘refreeze’ to achieve a new stability and order. This can be a slow process, with no clear boundaries to mark the end.

People can get used to the transition period and it can become an end in itself. In practice organisations tend not to fully refreeze, but retain a slight ‘slushiness’ anticipating the next change. This makes it easier to ‘unfreeze’ for the next change, but people are reluctant to commit because they are always expecting another change.

The benefits to the Lewin model is that it is a clear and simple model, which can make planning easier. By identifying and tackling opposition head on, difficulties can be minimised.

(Kew and Stredwick, 2010)

(Smith, 2013)

Benchmarking is a business planning tool for an organisation uses to compare its activities against:

 

  1. Leading organisations in the same industry
  2. Leading organisations in a different industry
  3. Recognised best practice operations

Benchmarking is an uncomplicated way for a business to review its operations. Gaps and deficiencies can be identified by comparison with better performing organisations. Benchmarking can be applied to strategy, operations and processes. The method of benchmarking involves several steps (appendix 6).

The benefit for businesses is that it brings the focus to the areas which should be given special attention and can give quick results and improvements if properly handled. Limitations of this tool are, it helps to identify areas requiring improvement but doesn’t provide the solution and lacks innovation. It generates data which doesn’t explain how it was achieved. It does however, provide novel ways of working and fresh thinking. Comparisons with industry rivals are much more relevant than comparisons with one’s own past performance.

(eFinanceManagement 2018)

Balanced Scorecard (BSC): Attempts to combine qualitative and quantitative performance indicators thereby giving a more comprehensive view of the organisations competitiveness. It can be used to align stakeholder expectations with corporate performance to achieve strategy goals.

Kaplan and Norton (1992) identified four areas for measurement (Torrington et al., 2009):

  1. Financial
  2. Customer
  3. Internal Business Process
  4. Learning and Growth

In each of these areas critical elements need to be identified and a way to measure their current level and any progress made devised. When a measure indicates deviation from the target actions can be applied to remedy this.

The BSC cannot give quick results and takes time and careful planning to implement. To succeed it requires a strong comprehensive strategy.

For change management to be successful, the HR function has a vital part to play.

  • They will be involved in the initial project stage and identify and train the leaders and teams required for organisational change
  • They will need to assess the impact on the organisation and stakeholders and provide reassurance.
  • Communication to all affected by the change is key to success of this process.
  • Measure the impact of change agenda on human resources, evaluate and report for example on; absence levels, employee feedback, turnover, training etc.
  • Reassess working practices and processes
  • Look at where costs can be reduced – mergers and takeovers
  • Workforce profile, capability and terms and conditions

Individuals reaction to proposed changes will differ, each employee will be in a unique position in terms of change, can be positive or negative. HR’s role in dealing with this is to create an organisational culture that embraces change, appropriate communication, ensuring employee participation in any change; HRD interventions; and the management of expectations and conflict.

Taylor and Woodhams (2016)

3.2: Sources of business data used for HR planning purposes

 

Data collected can be primary or secondary, qualitative or quantitative. Primary data is new data which is collected specifically for the area of study in which it has been collated. Secondary data, is information which has been previously researched and is used to compare against current statistics. As noted in Taylor and Woodham (2016, p.94) “Bryman and Bell (2015) point out that qualitative data is usually based around words and meanings, rather than collection and analysis of numbers. In contrast to this, quantitative data usually contains numbers and can be analysed through statistical analysis software.”

Surveys: qualitative data

Questionnaires are compiled relating to the research subject. Questions need to be clear and concise and geared towards the subject being investigated. This is a cheap and convenient method of collecting information. It can be difficult to ask in depths questions and can have low response rates, unless incentives are offered. Surveys are most commonly used to investigate employee opinion and satisfaction, culture and engagement.

After collating and evaluating the data HR should have an idea of how effective the organisations current plans are for employee engagement and satisfaction and what measures need to be taken for improvement. The aim of the survey should be to develop and implement the relevant programmes and practices required to improve employee morale, motivation and engagement.

Upon identifying areas for improvement, such as lack of training. HR will establish cross-functional teams to implement the plan of action and provide support during this process to management. The following will have to be taken into consideration during this process:

  • What needs to happen
  • How will it happen
  • Timelines
  • Resources
  • Improvement targets
  • Method of measurement
  • Progress review dates
  • Making plan adjustment
  • Completing action items
  • Measuring impact and continuous monitoring

(Taylor and Woodhams, 2016)

Interviews: qualitative data

 

Normally conducted in one to one or group interviews. Questions are typically open-ended and conversational. The questions should relate to the research being investigated. Interviews can be useful when research is required to investigate issues in detail, particularly when performance management is being researched.

Once the success measures have been agreed, data needs to be evaluated to understand how effective your current performance management structure is and areas for improvement. HR should consult with senior management on actions to take once the results have been analysed. After discussions with both senior and middle managers and staff on how improvements can be made, an action plan needs to be implemented.

 

It’s imperative HR and management follow through with the planned strategy. Investment in performance management pays dividends by achieving the following:

  • Retention and engagement of employees
  • Building a global leadership pipeline
  • Improved employee learning

 

Employee Turnover: quantitative measurement

Organisations need to monitor turnover due to cost, performance and retaining skilled employees.
Issue with turnover can be identified by using analysis, benchmarking and a needs assessment. To achieve more beneficial results these metrics should be collated both internally and externally. After collating and analysing the data, it should be determined to what extent there is an issue with turnover and what strategies will resolve this.

Metrics will show how many employees are leaving the company in the timeframe researched, typically one year. Results should show trends and provide information why employees are leaving. HR and management will decide what targets / strategy to implement depending upon what the problem is. It is essential there is ongoing monitoring and evaluation to determine its benefits compared to the cost. Effective practices to reduce turnover are training, rewards and teambuilding activities.

Benchmarking can be used as a business tool for identifying any gaps or improvements required to remain competitive. Insights gained by benchmarking against competitors are e.g., pay and rewards. Dashboards are a convenient and manageable way for HR to monitor metrics, often known as key performance indicators (KPIs).

Absenteeism: quantitative measurement

High absence levels are a sign of employee dissatisfaction and can lead to staff resigning. Qualitative data collected for absence is valuable for an organisation as sickness, particularly long-term absence is very costly. Variations between different areas in the business can be indicative of problems.

Data can show patterns and trends in absence, which need to be identified. Common measures used to identify absence are as per Healthy Working Lives (2012):

Frequency of absence – common measures you can use include:

  • total number of spells of absence in a specified period
  • average number of spells of absence per employee in a specified period

Length of absence – common measures you can use include:

  • average number of days of absence per absence spell
  • average number of days of absence per employee in a specified period.

Where a problem has been shown to exist, absence and well-being strategies can be planned by the use of the following:

  • Return to work interviews
  • Well-being of employees
  • Create an open culture
  • Use of trigger points

Key to business data is that it is all linked and must be aligned to the overall strategy of the organisation. Quantitative data is objective and will give precise and accurate analysis. Qualitative is more subjective and unless rigour is applied in its collection, it can give misleading results.

(Vulpen, 2017)

Conclusions and Recommendations

 

It is important to be aware of external factors which may impact on the business and the HR function. These need to be identified and assessed for any risk or opportunities. These external factors can have significant impacts on an organisations strategy, therefore need to be factored into all strategy planning.

The HR function has a crucial role in all areas of organisational strategy. The HR structure must be such that it can offer valid strategies, insights and solutions, to fit in with the business and stakeholder requirements.  This structure needs to be suitable to help develop the business strategies and implement them, taking into account business ethics and organisational accountability.

To implement the necessary strategy changes, good knowledge of the current business performance is required. To facilitate this, high quality, relevant and objective data needs to be collected, this will increase the accuracy and effectiveness of any business planning tools used, such as benchmarking.

It’s important to have a well-planned strategy to gain the expected competitive advantage. This has to be harnessed to a plan for implementation. HR can help with this at all stages.

  • I would recommend an analysis of external factors such as political, environmental, social and technological by using the PESTLE tool.
  • A review should be carried out to assess whether the current HR structure is suitable to implement and carry out the organisational strategy.
  • Review the current code of practice and ensure it is relevant and aligns with the business vision and mission.
  • A survey should be carried to measure employee engagement, to assess opinion prior to any planned changes in business strategy.

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XpertHR (2017) Will there be changes to the rules on obtaining consent to process personal data under the General Data Protection Regulation? | FAQs | Tools | XpertHR.co.uk [online]. [Accessed 7 January 2018]. Available at: <http://www.xperthr.co.uk/faq/will-there-be-changes-to-the-rules-on-obtaining-consent-to-process-personal-data-under-the-general-data-protection-regulation/161505/?cmpid=ILC|PROF|HRPIO-2013-110-XHR_free_content_links|ptod_article&sfid=701w0000000uNMa>

Appendices

Appendix 1: SWOT Analysis

A SWOT analysis helps an organisation to comprehend the following:

 

  • Strengths – the advantages a business has over its competitor.
  • Weaknesses – the internal disadvantages in comparison to your competitors.
  • Opportunities – external changes which can be taken advantage of.
  • Threats – external changes which have may have a negative impact on the business.

Appendix 2: PESTLE Analysis

PESTLE Analysis examines the external ‘macro environment’ in which a business exists, these factors are:

  • Political – government regulations, trade restrictions and political stability.
  • Economic – economic growth, interest rates, inflation and exchange rates.
  • Social – population growth, age demographics and attitudes towards health.
  • Technological – rate of technological change, automation and investment in innovation.
  • Legal – current or future legislation which may impact the business.
  • Environmental – global warming, environmental controls and requirement for sustainable policies.

Appendix 3: Porter’s Five Forces

Porter’s Five Forces (1979) is a powerful tool used to analyse the competitive environment of your business and show the potential profitability of your strategy. The five forces are:

  • Competitive rivalry – number and strength of competitors.
  • Threat of substitution – the ease and availability of substitute for your products in the market.
  • Threat of new entry – level of barriers to entry, high barriers will discourage new entrants to the market.
  • Buyer power – how easy is it for buyers to drive prices down.
  • Supplier power – how easy is for suppliers to drive prices up.

(Downey, 2007)

(Mindtools, 2018)

 

 

 

 

 

 

Appendix 4: McKinseys 7S Model: The seven elements

  • Strategy: is the plan developed by an organisation to sustain and improve their competitive advantage over its competition in the current and future market. By having a strong vision, mission statements and company values in place the strategy plan is more achievable.
  • Structure: is how the business divisions and sectors are organised – the reporting structure. This part of the model is one of the easiest to change and is also the most visible.
  • Systems: these are the daily activities of employees – processes and procedures. This area determines how the business is done and is a high priority for managers during change.
  • Shared Values: these are the core values and are the foundation of every company and should be visible in the organisations culture and work ethic.
  • Style: represents how a company is managed by the style of leadership chosen.
  • Staff: number of employees and their ability – taking into account how they will be recruited, rewarded, trained and keeping them motivated.
  • Skills: competencies and skills of the employees; this is particularly reinforced during organisational change when a company will have to assess what skills are required during this phase.

 (Jurevicius, 2013)

Appendix 5: How HR can embed an ethical culture

  • Prepare and promote a code of conduct policy with ethical values.
  • Act as role models to promote ethical conduct.
  • Recruit and select the right people with the right skills.
  • Inductions to include ethical stance of company.
  • Fairness with terms and conditions in employment contracts.
  • Performance management and rewards geared towards ethical goals and fairness.
  • Learning and development / training – equal opportunities.
  • Health and safety and well-being of employees.
  • Conflict resolution dealt with fairly by following policy guidance.
  • Anti-bribery and data protection policies promoted and enforced.
  • Anti-bullying and harassment policies written and training provided.
  • Encouraging and protecting whistle-blowers.
  • Equal opportunity and diversity policies and procedures.

(Taylor and Woodhams, 2016)

 

 

 

Appendix 6: The method of benchmarking steps

  • Define the benchmarking operation – identify potential areas of improvement and which processes required benchmarking.
  • Seek out the company or companies that excel in the areas identified.
  • Research the company – when gathering data decide how this will be handled (site visits, interviews, surveys etc.)
  • Analyse information/data researched for gaps and predict future trends.
  • Apply lessons learnt to your own organisation by developing an action plan, communicating with all stakeholders during this process and agreeing which metrics to use as a basis for comparison.
  • Monitor results and evaluate performance continuously

(Famuyide, 2015)

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