Human Resource Management: A Case Study Approach
Chapter 2: The Context of HRM

Starter case study:
1. What do you think is meant by the term ‘environment’?
In the HRM context, the environment is the factors that may affect an organisation. The PEST model categorises these as political, economic, social/cultural and technological. An organisation’s ability to influence these factors may be limited.

  1. How do you find out about or ‘monitor’ the outside world? Think of as many sources of information as you can and make a note of these.

There is a wide variety of sources of information that can be referred to, to gain an insight into the environment. For example:

  • Newspapers
  • News broadcasts
  • Periodicals
  • Surveys
  • Industry publications.

  1. What could be the benefit of supplying local knowledge to headquarters?

In an organisation that has multiple locations the value of local knowledge about the environment is very important. Issues such as other organisations closing/opening will affect the availability of staff. At the same time demand for a product or service may change if there is a decline or prosperity in an area. Transport initiatives could also affect either positively or negatively the accessibility of a site for staff and customers. Having this local knowledge will enable a distant central headquarters to plan, respond and react appropriately.

Exercise 1:
Look at Table 2.1. What reason can you give to explain the different percentage figures for stand-alone organisations and those that are part of larger organisations? When an organisation is part of a larger organisation there will usually be a centralised HR strategy that will need to disseminate at a local level. For example, in a multinational organisation the HR strategy will have to be implemented in line with local employment legislation. In a stand-alone organisation the local conditions are those within which a generalised HR function is already operating.

Likewise, why do you think a greater proportion of public sector organisations have employment relations specialists at the workplace level or higher?
Public sector organisations HR strategy is driven ultimately by governmental policy. This needs to be applied consistently across a variety of organisations, often involving significant numbers of employees. Having ER specialists will facilitate this process.

Exercise 2:
Apply the systems model to a service provider known to you. What would the inputs, throughputs and outputs be for your chosen organisation?
How does it add value to its inputs?
Students should be able to identify the difference between inputs and outputs, and the dynamic nature of the transformation from one to the other. In addition, students should be able to recognise the value-adding nature of the transformation so that the output is worth more than the sum of the parts.

Exercise 3:
So far, we have considered the PEST model from the perspective of the HRM environment. It is now time for you to apply the PEST model to an organisation known to you. For each of the four factors consider the respective influences.
For each factor students should consider how their organisation may be affected. Political factors could include government legislation, economic factors may lead to a discussion of the impact of exchange rates on an international business, social factors may link to the emphasis of recycling, and technology may look at the benefits of virtual teams and e-working.

Exercise 4:
Drawing upon the same organisation you applied the PEST model to earlier, consider its overall environment by reference to the four dimensions of analysis.
Students should be able to refer to and understand where their own organisation sits on the scale for the four dimensions (diversity, complexity, routine and hostility).

Exercise 5:
What is the difference between being economically active or inactive and being employed or unemployed, and how does this affect the work of HR professionals?
The economically active workforce is people who are of working age who are either working or seeking work. Economically inactive people are those of working age who are not working. This may be due to carrying out caring responsibilities eg childcare, although this group also includes early retirees or those people who are incapacitated through illness or disability. People who are employed are in paid work, which may be full or part time, permanent, temporary or self-employed. The category unemployed refers to people who are not working but want to.

When HR professionals are looking to recruit both in the short and long term, they need to consider the availability of appropriate staff that are in the right place, at the right time, with the requisite skill set and willing to work in the way that the organisation needs and wants.

Exercise 6:
In addition to age and skills of people, what other issues should HR managers be aware of when considering the potential impact of employment markets on HRM? What can they do to plan for the identified issues?
Students may identify a variety of potential impacts, for example, the desire among groups of employees for part-time / flexible working. HR should have policies in place that facilitate these requests and support the organisation in finding alternative ways of working that enable employees to balance work-life against other external commitments.

Exercise 7:
Identify industry publications and business periodicals that HR managers might regularly read to keep them informed of changes in the HR environment. How would you as a HR manager seek to monitor changes in the types and supply of labour sourced from university graduates?
Students would be expected to identify sources such as People Management, Personnel Today, Income Data Services and publications from the CBI, Management Institute and Chamber of Commerce. Specific surveys are produced tracking the trends in the graduate market, for example, by Income Data Services (IDS).

Case study
1. What could be the potential impact of this development on Atif and his colleagues both as HR specialists and as employees?
A competitor could take away business, leading to a need to cut the existing workforce resulting in redundancies. In addition, staff may be attracted to the new store, or may decide to seek other alternative secure employment, all of which will lead to recruitment and retention issues. There will also probably be an impact on staff morale. Reviews of salaries and benefits may be needed to help with these issues.

2. Recalling the work you did on sources of information for the first case study, what sources were Atif and his colleagues using and what others could they have used?
The original source used was a newspaper article and anecdotal evidence. In addition, they could have referred to council minutes or other press sources.

3. Why was the development described above as a surprise?
It seems the development should not have been a surprise as a lengthy lobbying process would probably have been reported in the local press. In addition, this development had clearly been a topic of conversation for Alice and her neighbour.

4. What range of responses to this development should be recommended to the director?
· Review of salary and benefits package
· Benchmark current HR practices for recruitment
· Consider linking performance and pay to motivate and retain staff
· A communication programme should be initiated to reassure staff and allow for feedback.

5. What long-term strategy would you recommend?
The organisation needs to ensure that it is the employer of choice. The business needs to offer a competitive salary scale and attractive benefits; in addition, it should consider what else it can offer such as training and development opportunities. The organisation also needs to be clear on its strategy and decide if it will try and compete on price or by giving value in another way, for example, its service. The HR strategy should then need to be adapted to support this.