The evolving role of HR in the contemporary business world

Question: Write an essay on "The evolving role of hr in the contemporary business world". Answer: Introduction The business world is changing, and the organizations are surviving in a dynamic market environment (Zugno et al. 2013). There is an evolving role of the human resource management in the world business scenario. The human resource management is a powerful tool in bringing in the success of the organization (Zugno et al. 2013). The business world is constantly evolving, and it is internal as well as external factors affecting the business. The human resource has an impact on the functioning of the business (Zugno et al. 2013). The report would evaluate the business issues, internal and external factors affecting business and the impact of HR on the business operations. Models of the HR function The human resource function has a bright future if it is managed and designed in a strategic manner. The objectives of the human resource management revolve around the effective utilization of the human resources, an optimum level of working relationships among the employees and the maximum individual development of the human resources (Armstrong and Taylor 2014). The major functions of the human resource department consist of the planning, job analysis, recruitment, selection, orientation, training and development, performance appraisal, compensation and career planning (Salvendy 2012). The HR function comprises of the labor relations, record keeping, employee research, and others. David Ulrich, the greatest management person of HR, had the ability to influence the dynamics of human resource, which is used even today. He delivered the world renowned Ulrich model or the 3 legged stool models. He proposed four important HR roles that are responsible for effective organization. The four crucial roles in HR are Change Agent, Administrative Expert, HR Business Partner and Employee Advocate (Cipd.co.uk. 2016). He proposed the concept of HR business partnering. It specifies that there is collaborative work between the HR managers and the business leaders, which help them to achieve the common organizational objectives. The business partners consist of the senior HR professionals (Cipd.co.uk. 2016). The Ulrich model has faced several criticisms in the past. The model is believed to have made negligible or no contribution to the strategic thinking. The model is unable to convince the senior level managers regarding the required business acumen to affect the strategic ro le. There are many critics that think about the credibility of the Ulrich model and perceive the model as an inaccurate way of people management. This model is used even today because, though, it is not a perfect model, but it provides a good reference point for the HR framework (Cipd.co.uk. 2016). This is because this model defines a clear role of the HR and creates a structure for the addition of value for the organization. This model creates a competitive advantage for the concerned organization. HR strategies A set of actions that are aimed at the integration of the organizations culture, people as well as systems so that the organization can achieve its business goals, are known as HR strategy (Momin and Mishra 2015). The HR strategy has four key dimensions such as people, organization, culture and the HR system (Lakshmi 2016). The people consist of the employees of the organizations along with their expertise, skills, and capability. The organization comprises of the job roles, structure and the hierarchy structures present in the organization (Scott and Davis 2015). The culture consists of the beliefs, norms, values and the management style of the organization. The HR systems consist of the selection of the employees, training, communications, career development, careers and others (Salvendy 2012). All these factors jointly contribute to the formulation of the HR strategy (Bamberger Biron and Meshoulam 2014). The successful HR strategy should be by the business policy, business objecti ves, budgetary requirements, engagement of staffs and the overall development of the organization. The HR strategy is considered as a vision of the organization (Salvendy 2012). The HR strategy requires the participation of the entire workforce. The HR strategies should be formulated after the assessment of the current business practices as well as the HR practices (Salvendy 2012). There should be forecasting of the HR requirements, which should be based on the goals of the organization. The gap analysis is also important that measures the difference between the current scenario of the organization and the vision of the organization. HR insights The human resource function leads the transformation process of many organizations towards a high performing, engaged, appropriate align and highly capable companies (Ulrich 2013). The HR function has gone through several transformations. The HR function has transformed from an operational role to a center service role (Ulrich 2013). The HR department is focused on the creation of integrated programs to attract and retain the premium quality manpower (Amin et al. 2014). The HR department also strives to drive a compelling brand of employment, improve the performances of the employees and to ignite the learning and development process (Cipd.co.uk. 2016). Fig: Four phases of HR Source: (Cipd.co.uk. 2016) The above diagram shows the evolution of human resource and the concerned technology. The companies' mission and purpose change as they move from one phase to the other. The organizations focus on efficiency as they progress from Phase 1 to Phase 2 (Cipd.co.uk. 2016). The setting of service centers take place at this level, and the organizations assign appropriate business partners to decrease the inefficiency of the service delivery. The organizations focus on the effectiveness of the talent initiatives when they progress from Phase 2 to Phase 3 (Cipd.co.uk. 2016). They look at parameters like time of closing the vacancies, quality of recruitment, training measures, and leadership as the measurement of success. The organizations try to experiment with something different when they finally arrive at Phase 4 (Cipd.co.uk. 2016). They try to modify their HR process so that it benefits the business functions and support the business directly. HR solutions for business The human resource functions play a crucial role in the business performances (Jiang et al. 2012). There should be structured governance and the development of a business case. The HR personnel should have a working relationship with all they key business leaders. The HR can involve the business leaders of the organization in the planning processes and the governance (Jeston and Nelis 2014). This involvement would enable the business alignment, which results in greater support for the business. The development of advanced workplaces planning and greater implementation of workforce analytics should be done (Jiang et al. 2012). This enables the high impact HR organizations to transform the organizations business data, talents, and external workforce data into suitable insights (Jeston and Nelis 2014). These business insights help the business leaders for better decision making. The implementation of the correct HR philosophies should be done so that the employees can contribute to the business success (Hsieh 2015). The effective philosophies focus on fostering collaboration and innovation. The innovative workplace makes it the best place to work and the organizational efficiency increases (Jiang et al. 2012). Business ethics The business ethics comprises of all the different aspects of business conduct, sales techniques, accounting practices, boardroom strategies and others (Ghillyer 2012). The organizations should strive for high standards of business, which is based on the ethical principles and corporate responsibility programs (Stone 2013). The codes, programs, training, support and others should nurture an ethical culture (Stone 2013). The ethics and HR functions should recognize their respective roles in the organization (Stone 2013). The good relations between the ethics team and the HR department help the organization to attain a value based culture. The HR team should emphasize on the ethical behavior of the employees. The organization should not tolerate any unethical behavior of the employees and should formulate strict rules for the unethical actions (Stone 2013). The internal customers, as well as the external customers, should be communicated well regarding the consequences of unethical act ivities (from an organizational point of view) (Stone 2013). The human resource department should focus on recruitment activities and should undergo detailed background verification to ensure that the employee they are hiring has good past records. The company should ensure that the new hire is a genuine one and should not possess any criminal records (Strohmeier 2013). HR plays a vital role in ensuring how the ethical values are embedded in the organization. Accountability The HR department is accountable for the workforce management practices. The HR should ensure that the employees meet the ultimate organizational outcomes (Marsden Caffrey and McCaffery 2013). The HR accountable practices should identify and anticipate the management issues in HR (Hr.wa.gov. 2016). The HR practices should formulate data-driven HR management strategies and solutions (Marsden Caffrey and McCaffery 2013). The HR practices need to be accountable so that the existing processes can be improved and the success of the department can be measured. Fig: Accountability of Workforce Management Source: (Hr.wa.gov. 2016) The accountability practices of the workplace management should consist of steps like planning and align, reinforcing, developing, deploying and hiring of suitable candidates (Sikora and Ferris 2014). The HR process should include the analysis of key workforce success, strategies, and the challenges. The analysis of the workforce measures and the performance of all the employees should be measured on a regular basis (Hr.wa.gov. 2016). The employees should fulfill their individual accountabilities so that there are effective human resource management practices in the organization. SWOT SWOT is an excellent technique for understanding the weakness and strengths of an organization as well as identification of the open opportunities and the potential threats (Buller and McEvoy 2012). The threats can also be eliminated by the proper analysis of the SWOT (Buller and McEvoy 2012). It is important to determine the strengths of the business.. . The possible threats would include a lot of competition, a downturn in the economy, less purchasing capacity of the people and others. The organizations should devise suitable strategies to combat the threats faced over a period. PESTLE P stands for Political factors, which means that political situation of the country should be taken into consideration and the political situation of the world should be considered before formulating any strategy. The government leadership, tax laws, customs laws, government tariffs and others should be taken into account when formulating business policies (Sadgrove 2015). E stands for Economic factors, which include determinants of an economy and its current condition (Sadgrove 2015). The different economic factors that should be considered are the inflation rates, monetary policies, fiscal policies, foreign exchange rates and others (Sadgrove 2015). The S stands for social factors, which means that mindsets and culture of the different country are different. The gender, cultural implications, social lifestyles and others should be considered while formulating organizational policies (Sadgrove 2015). T stands for technological factors, which implies the digital advancements and how the consumers respond to the same. This factor is rapidly changing, and hence, the organizations need to give special attention to this. The L stands for Legal factors that imply that the organizations need to be aware of the concerning laws, regulating the body and legal developments (Sadgrove 2015). The E stands for Environmental factors, which comprises of the geographical location of the country, climatic changes, and others (Sadgrove 2015). The organizations should take into consideration all the above factors for efficient decision making and formulation of policies. Porters 5 Forces This is a powerful tool for understanding the location of power in a business scenario. It represents the strength of the present competitive position of an organization. The five forces that influence the organization are supplier power, buyer power, and competitive rivalry, the threat of new entry, the threat of substitution and others (Hanlon 2013). The Supplier power influences the way the suppliers influence prices (Hanlon 2013). This is determined by the number of suppliers, uniqueness of each product, strengths of the products and others. The buyer power signifies the importance of each buyer to the overall business process and is determined by the number of buyers and the value each buyer brings to the business (Hanlon 2013). The competitive rivalry signifies the number and the capability of the competitors. This is the most important factor for a business entity because customers would switch on to other brands if they are not satisfied with a particular brand (Hanlon 2013). The threat of substitution is affected by the ability of the consumers to explore a different way of doing the individual job parameters (Hanlon 2013). If the substitution product is easily available and the substitution option is viable, then it would weaken the power of the business. The threat of new entry signifies the ability of other people to en ter the same market or the same industry (Hanlon 2013). In the absence of significant barriers in the market, the company may not be able to maintain their favorable position and the new competitors would take the companys position soon. Comparison of tools for analyzing business environment PEST analysis is appropriate for the companies that wish to conduct market research on the industry and the products. The Porters Five Forces is suitable for assessing competition within the market and examining its correlation with profitability. PEST analysis allows the experts to examine a wide variety of factors, which is helpful in the process of decision making. PEST analysis takes account of the various factors like economical, political, social and technological factors that influences the functioning of the organization. SWOT stands for Strengths, Weakness, Opportunities, and Threats. This technique is useful in analyzing the present condition of the business and to anticipate the future concerns of the organizations. SWOT tool helps to uncover the opportunities and understand the possible weakness of the business. The SWOT tool also provides insights about the companys good characteristics and the weaknesses of the company. It is important to determine the advantages of the organization, unique selling proposition, lowest cost resources, quality of the manpower, and quality of the products to remain ahead of the competition. The strengths should be considered from the internal perspectives as well as from the customers point of view (Gentry et al. 2013). The weakness of the business should also be analyzed so that corrective actions can be taken towards the improvement of the business (Trieloff and Buys 2013). There could be various weaknesses to a business such as missed deadlines, lot of pending work, a high rental cost of office, outdated data on market research, insufficient record keeping, and infrequent cash flow systems (Buller and McEvoy 2012). The opportunities of the business comprise of the interesting trends, loyal customer base, a seasonal high demand of products, high demand for similar merchandise and others (Buller and McEvoy 2012). The company should utilize the opportunities that are open to them. The threats include the obstacles of the company along with the acts, products and strategies of the rival organizations (Buller and McEvoy 2012) The macro environment of an organization is analyzed through PESTLE analysis (Sadgrove 2015). This analysis gives an idea to the managers regarding the present situation of the organization and the future position of the organization. This analysis comprises of the components that influence the business framework and each factor denoted by the letters, represent the influencing factor of the industry (Sadgrove 2015). The results from PEST help the company to plan for its future. SWOT model is less robust than PESTLE analysis. This is because the PESTLE provides the overall analysis of the macro environment that affects the smooth functioning of the particular organization. Porters five forces is a unique model that helps the organization to perform a competitive assessment. It helps the organization to assess the viability of a particular service, product or future expansion. The SWOT analysis, on the other hand, is a general assessment of the organization. Factors that affect organizations business or HR function There are different internal as well as external factors that affect the functioning of a business and particularly the HR function (Armstrong and Taylor 2014). The different factors are discussed below- Government Regulations- There are new legislations formed at regular intervals, which affect the functioning of the HR department, such as recruitment, training, termination, compensation, HR policies and others (Armstrong and Taylor 2014). For example, the organization must comply with the rules of terminating an employee; else they would be imposed heavy fines, and it would be detrimental to the company's image. This is one of the external factors faced by the companies. Technological advancements- The technology is an external factor that is rapidly changing, and it is imposing a high degree of influence to the organizations. The organizations are in a constant pressure to adopt the latest technology (Armstrong and Taylor 2014). On the other hand, the introduction of a new technology implies that there would be the redundancy of human manpower. For example, the HR department engages in firing of the existing employees as their share of work is done by the new technology that is installed. Economic conditions- The biggest external factors that influence an organization are the economic conditions of the country and the world at large. It affects the talent pool and the hiring decisions of the organizations (Armstrong and Taylor 2014). The organizations should prepare themselves with suitable strategies in the times of economic downturn. The companies should face the bad economy with appropriate strategies. For example, in times of economic downturn, the organizations engage in lower recruitment drives, in order to cut down the costs. Workforce demographics- This is one of the most important internal factors that affects the functioning of an organization. This factor deals with the retiring workplace population and the hiring methods opted by the organizations (Armstrong and Taylor 2014). The organizations must look for different ways of recruitment that are best suited for the organization. There is a need for different types of compensation packages that need to be designed for the different sections of the employees. For example, a majority of the workforce population close to the retiring age implies that the organization needs to hunt for new employees at a faster pace. Key stages in the formulation of strategy The human resource strategy includes several steps that need to be followed. The steps describe the translation of the selected strategy into organizational action to fulfill the desired goals and objectives (Lakshmi 2016). The human resource personnel are involved in each of these stages. The steps are described below- Determining the organizations objective Evaluation of the organizational environment Setting up of the quantitative targets Coordination with the divisional plans Analysis of performance and performing gap analysis The selection of suitable strategy Development of an organizational framework for implementing the strategy successfully. Disbursement of sufficient resources to the vital activities. Creation of policies that are in line with the strategies. Employment of best programs and policies for the purpose of constant improvement. The creation of linkages between reward structure and the accomplishment of results Efficient utilization of strategic leadership. The strategic HR involves two types of integration process known as vertical and horizontal process. The vertical integration deals with the alignment of HR practices with the strategic management process of the firm (Cipd.co.uk. 2016). This is based on the contingency approach and creates a framework for the overall fitment of the management strategies. The horizontal integration consists of coordination of the various types of HR practices (Cipd.co.uk. 2016). It deals with the efficient allocation of resources. The primary idea of the organization is to create a fit organization as well as a flexible organization, which can efficiently manage the dynamic environment of the organization (Cipd.co.uk. 2016). There are several best practices of the organizations such as security of the employees, appropriate selection of employees using different criteria, decentralization, high compensation packages, rich content of training and the sharing of performance information (Cipd.co.uk. 2016 ). The strategy formulation and the implementation of the strategy are the two most important functions of the HR team. The stage of strategy formulation deals with the evaluation of the interaction between the strategic choices and the strategic factors by the senior managers. The strategy implementation deals with the various tools as well as techniques that are utilized by the managers to implement their formulated strategies. The following diagram shows the inter relation with the strategy formulation and the strategy implementation- Fig: Model of Strategic Management Source: Created by Author Strategy Formulation The key stages in the formulation of strategy are strategic choice, corporate, business and functional. The strategic choice deals with the selection of a particular alternative for the betterment of the organization. The basic role of HR is to choose between several options, which are beneficial for both the organization and the employees. The corporate level strategy comprises of the overall direction of the organization and the philosophy of the organization towards the growth of the organization as a whole. The HR takes various strategies towards this stage such as proper utilization of the corporate resources, improving performance of employees, managing the diverse workforce and others. The business level strategy deals with the actions and decisions in relation with the business units. The HR takes a key role here by the implementation of a suitable HR strategy after the selection of a suitable competitive strategy. The functional level strategy concerns with the major functio nal operations within the business unit. The HR takes a key part by maximizing the productivity of the resources in the organization. Models for strategy formulation and implementation There are two types of models that underline the formulation and implementation of HR strategies. They are Control based models and Resource based models. The first one deals with the fact that the organization constantly monitors and evaluates the performance of the employees. It is based on the degree of workplace control as well as the behavior of the managers. The resource based model is based on the employee-employer exchange and is based on the employee behaviors. These two models form the basis for the HR strategy. Evaluation of business performance The human resource employees play a pivotal role in the formulation of business strategy (Bamberger and Meshoulam 2014). The organizational leaders have laid great emphasis on the importance of flexible, well skilled and high performing employees. The HR should formulate suitable skills for imbibing new skills and device suitable recruitment strategies that would fulfill the organizational goals. The HR is also responsible for the formulation of suitable training policies and training methodology that would be appropriate for the employees (Bamberger and Meshoulam 2014). The best sources of recruitment are finalized, and the hiring decisions are formulated by the human resource department (Armstrong and Taylor 2014). The structure of performance management is formulated by the human resource department. The HR is responsible for optimum utilization of the internal and external data. HR facilitates the change management in the organization by the implementation of suitable policies, w hich applies to all employees of the organization (Bamberger and Meshoulam 2014). For example, HR is responsible for implementing 360-degree performance appraisal in the organization (Armstrong and Taylor 2014). In this process, it can be seen that HR plays a key role in business planning and the management of change. The business performance should be evaluated by the traditional and modern indicators. The traditional indicators measure the performance of the employees with reference to the organizational goals. These indicators show only the average results. The modern indicators consider each and every activity of the employees involved in various business processes. It depends on the value based management, which encompasses the strategies, system, processes, analytics and the cultural goals of the company. The example of traditional indicators includes the evaluating of ones performance with the business goals. The example of the modern indicator includes the 360 degree performance appraisal systems. Assessment of different sources of data There are various types of data, which is used by the HR managers. There are qualitative data as well as quantitative data sources. The balanced scorecard is used by the HR to align the business activities to the strategic goals of the organization, improve levels of communication and evaluate the organizational performance. This scorecard was proposed by Norton and Kaplan. This is one of the most popular performance management methods. The AMO-Black box model is also used for assessing the performance of the employees. The AMO signifies the Ability, Motivation and Opportunity. There is a need of the performance measurement of these parameters in an organization. The black box signifies the relation of the HR and the performance management in an organization. It describes the mediating mechanism by the virtue of which the HR impacts the performance of the employees. The HR managers also use the Cotters stage model for assessing the change management process in the organization. The various stages are create urgency, formation of powerful coalition, creation of a compelling vision, communicating the vision, removal of obstacles, creation of short term success, building on the change and true implementation of the modifications in the corporate culture. The HR uses a wide source of information for the purpose of planning. The HR uses the various sources of internal data for the purpose of the formulation of strategies and the decision making . The employees databases, company performance, success data of various policies, sales data, financial data, marketing data and others are used by the HR department (Amin et al. 2014). The external data is also utilized by the HR department like competitive information, government data, environmental analysis, technological advancements and others. The HR utilizes vital information sources from both internal sources as well as the trusted external sources, for the purpose of smooth functioning. Conclusion The business environment is a dynamic place where is the coexistence of the internal factors as well as external factors. The HR plays a vital role in balancing the effect of the external factors. The HR is required to coordinate with the business processes and implement suitable policies that are beneficial to the organization as a whole. This report would be beneficial for understanding the HR strategies and the organizational strategies. This report would help the managers by responding effectively to the changes of external environment. References Amin, M., Khairuzzaman Wan Ismail, W., Zaleha Abdul Rasid, S. and Daverson Andrew Selemani, R., 2014. The impact of human resource management practices on performance: Evidence from a Public University.The TQM Journal,26(2), pp.125-142. Armstrong, M. and Taylor, S., 2014.Armstrong's handbook of human resource management practice. Kogan Page Publishers. Bamberger, P.A., Biron, M. and Meshoulam, I., 2014.Human resource strategy: Formulation, implementation, and impact. Routledge. Buller, P.F. and McEvoy, G.M., 2012. Strategy, human resource management and performance: Sharpening line of sight.Human resource management review,22(1), pp.43-56. Cipd.co.uk. (2016).CIPD Championing better work and working lives CIPD. Ghillyer, A., 2012.Business ethics now. McGraw-Hill. Hanlon, A., 2013. How to Use Porters 5 Forces.Smart Insights, November,18. Hr.wa.gov. (2016).Washington State HR. Hsieh, C.T., 2015. Implementing self-service technology to gain competitive advantages.Communications of the IIMA,5(1), p.9. Jeston, J. and Nelis, J., 2014.Business process management. Routledge. Jiang, K., Lepak, D.P., Hu, J. and Baer, J.C., 2012. How does human resource management influence organizational outcomes? A meta-analytic investigation of mediating mechanisms.Academy of management Journal,55(6), pp.1264-1294 Lakshmi, T., 2016. Linkage of HR strategy with business strategy for organisational effectiveness an analytical study. Marsden, P., Caffrey, M. and McCaffery, J., 2013. Human Resources Management Assessment Approach.Capacity Plus. Momin, W.Y.M. and Mishra, K., 2015. HR Analytics as a Strategic Workforce Planning.IJAR,1(4), pp.258-260. Sadgrove, M.K., 2015.The complete guide to business risk management. Ashgate Publishing, Ltd.. Salvendy, G., 2012.Handbook of human factors and ergonomics. John Wiley Sons. Scott, W.R. and Davis, G.F., 2015.Organizations and organizing: Rational, natural and open systems perspectives. Routledge. Sikora, D.M. and Ferris, G.R., 2014. Strategic human resource practice implementation: The critical role of line management.Human Resource Management Review,24(3), pp.271-281. Stone, R.J., 2013.Managing human resources. John Wiley and Sons.