Essay on The strategic HRM and importance of the environmental factors analysis

According to Boxall, Purcell, and Wright (2007), the role of international HR professionals becomes crucial as companies continue to globalize. The traditional business structure is being reviewed, it is transformed by new technologies; the business opportunities that constantly arising.

Taking into account this quick race of transformation and the breakage of the boundaries, it’s clear that the competition rapidly increases.

Garavan (2007) and Morrow and Hitt (2000) indicate that the flexibility in responding to the environmental changes and influences is vital for its overall market success.

At the same time, Semler (1997) claims the importance of effective and quick reactions to the threats and opportunities of the external environment, no matter what the internal situation the company has at that moment. Any company that wants to achieve the market success needs to be able to react and take control over its environment. Author defines the global environment as three elements: local, national, and multinational. It includes economic and political trends, technology change, labor market characteristics, national and cross-cultural differences, and international laws and regulations. (Semler, 1997)

Strategic human resources management concept suggests using an effectively designed human resources system as a proper competitive advantage.

What should be the actions of HR professional in order to ensure that organization undertakes necessary steps to prepare to certain environmental challenges?

Garavan (2007) says that first of all organization should concentrate on continuous environmental scanning. Then the effect of external factors on organization should be analyzed. This kind of understanding and competency actually increases the value of the skilled HR professionals for the company.

This analysis that HR department should undertake usually include the following approaches:
The research of environmental factors and their influence on organization in the context of human resource management.

SWOT (strengths, weaknesses, opportunities, and threats) analysis with a research of various elements of the HR system in the organization. (Wischnevsky, Damanpour and Méndez, 2011)

What elements are included into the environmental analysis? Among the external factors I could name the following: organizational structure; global, national and local regulation and legislation; demographic situation, social and cultural factors, technology and its latest developments and finally the analysis of competitors’ activity (the approaches to the HRM, HR system, their strengths and weaknesses in this context).

As for internal factors, they should be properly assessed as well in order to find possible weak places in the human resource system.

In accordance to Garavan (2007), the firm’s organization structure is an important element of internal context. It provides direction concerning the development of strategic HRM systems. Besides the organizational structure, it is also important to study the policies, programs, organizational culture, leadership and capacities of the organization.

In my opinion, the objectiveness of the HR professional that conducts the internal environmental analysis is crucial, because the future performance of the whole organization will depend on the results of this assessment.

It should be also mentioned that there are of course more complexity for the international companies that operate on the global markets, because in this case environmental analysis requires a special detailed expertise. (“What You Need for a Strategic Hr Plan”, 2001)

Some authors, Chiavenato (2001) and Mol and Wijnberg (2011), also describe the importance of other factors such as technical, human and cost issues related to HR functioning).

Tesco HRM and its environmental analysis

I’ve chosen Tesco for this paper because it’s an aspiring and at the same time very useful example of UK company that became a global corporation and has a very strong and good developed HR system.

Tesco specializes on grocery and general merchandise retailing and it is successful not only on its domestic market, but also on international markets like the United States, Republic of Ireland, Thailand, China, Poland and others. Actually, Tesco is considered as the grocery market leader in the UK, Malaysia, the Republic of Ireland and Thailand. (“About Tesco”, n.a.)

It needs to be mentioned that this company is one of the largest global retailers. One of the results of this international expansion was the grown need in additional staff. Nowadays the company states that it has 280,000 UK employees and 460,000 overall including international markets. The retailer often requires qualified human resources for store-based and non-store positions. (Burt and Sparks, 2003)

It’s interesting to know that this company is unordinary, because it claims that approximately 80% of its management positions are recruited from within the company. This fact straight away indicates that the company is respectful to its own staff and has a lower dependence on the external human resources. In my opinion, it’s a strong competitive advantage of this company. (“About Tesco”, n.a.)

Trust and respect are inevitable part of Tesco culture, and these characteristics help to build comfort work environment. Diversity is another crucial feature of Tesco human resource police. People are different and diverse; the company recognizes that diversity is important and it works on attracting personnel from all social, cultural and ethnic backgrounds. (“Tesco careers”, n.a.)

Key environmental factors for the Tesco HR policy:

Social and demographic factors in the country (population’s structure and characteristics, mobility of the human resources structure, mobility, social roles, nature and development of social institution).