Business issues and the contexts of Human Resources

Outline

I. Introduction

II. Internal forces of HR

III. HR function: impact of external factors

IV. Stages of strategy formulation and implementation: the role of HR

V. The role of HR in business performance measuring

VI. The role and nature of information sources in HR practices

Introduction

The main wealth of any IT company in today's competitive environment is represented by people, their intelligence, creativity, and ability to create know-how. Therefore, a prerequisite for the successful functioning of the enterprise and its development is to ensure a high level of human resources management system. Finding, selecting, and hiring in IT company is a long and costly process. Each company strives to attract only those human resources that fully meet the goals and values of the organization. In the IT sphere, in addition to expanding the segment itself, the complexity of the tasks that professionals have to solve is increasing. In addition to the task of selecting employees and creating optimal conditions for their improvement, an important factor is the development of leadership qualities of managers. Today, not only HR and accounting (personnel accounting and payroll), but also management of staff training and development, staff selection, motivation, compensation, career, etc. are included in the sphere of HRM. Effective use of HRM techniques allows raising the motivation of employees to a new level, increasing not only the profit of the company, but also its image, enabling it to successfully enter new markets and to gain a sustainable competitive advantage.

Internal forces of HR

In order to be successful, the HR service, along with other business units, must perform a number of functions - from basic operations to strategic planning. However, many HR professionals make the typical mistake of focusing solely on strategic management or tactical components, while balancing strategic and tactical action is important. There are many “models” that outline the most important areas of activity of the average HR service. The most famous of these is undoubtedly the “four sectors” or “business partnership” model proposed by Dave Ulrich from the University of Michigan. However, whatever effective this model may be, it does not define the role of strategic planning. Alternatively, the Five Levels of HR Contribution Model (see Figure below), which better describes all levels of HR service functioning, is used in IT company under consideration. The “work” of HR managers can be clearly divided into five levels, from operational to strategic.

Abbildung in dieser Leseprobe nicht enthalten

Fig. 1. The Five Levels of HR Contribution Model.

Source: Storey, J., Ulrich, D. and Wright, P. M. (2019) Strategic human resource management: a research overview. Abingdon, UK: Routledge.

Managers holding strategic business positions define only the main end consumers of the company's products and services as their clients. Each employee should consider enhancing the value of these products and services to the end user as their priority and consider any action within the company from this point of view. However, when providing services within a company, it is important to clearly identify internal customers as well. In the 1990s, most HR executives considered it important to gain a place in the company's leadership (Storey, Ulrich and Wright, 2019). Fortunately, many have succeeded in it, and this dramatically changed ‘the rules of the game’ and redefined internal users of HR services. For HR managers who have already attained leadership status, and for those who are just coming to it, it should be obvious: to influence strategically, they must identify the company's top executives as their “internal clients.” There are many reasons for this, and below there are some of them:

- Top executives take a strategic position by definition: they control resources and lead units. Almost no mid-level manager can influence at the strategic level, so defining them as clients means to end any opportunity to influence the results;
- Top executives act as supervisors to line managers, which means they can influence them, persuade them to follow the advice of the HR manager and implement HR programs;
- To become senior executives in other business areas, HR directors must first demonstrate the success of their department in supporting productivity, enhancing profits, and achieving common corporate goals.

Thus, namely the company's top executives are the main internal clients of HR units. The HR manager should understand the business tasks of other top executives, their needs and expectations regarding human resources and then propose appropriate HR systems. All HR plans, services, evaluations and performance measurements should be tailored to the goals and objectives of these internal clients.

HR function: impact of external factors

It should be noted that many traditionally minded HRM theorists and practitioners value the role of HR managers as “employee advocates” or their assistants in conflicts with management. By contrast, at the other pole, there are those HR managers (especially defenders of a “productivity culture”) who consider this presentation the antithesis of strategicism. So far, none of the positions has been found to be entirely correct or false. However, the position of “employee advocates” has some inherent weaknesses. In particular, turning HR managers into “employee advocates” creates a “we against them” situation, while in fact, improving productivity requires teamwork. Creating opportunities for employees to appeal to a third party can adversely affect the direct relationship between them and the manager: instead of talking face-to-face, they get used to address mediators.

Taking responsibility for improving performance and forging a “culture of productivity” at the company, HR professionals often complain that it is “unfair” to expect them to manage productivity, since the end results are influenced by many other factors besides the actions of employees of different units (Purcell and Boxall, 2016). Many will agree that it is difficult to take responsibility without power. However, this is not uncommon in today's complex business world. In particular, being a strategist means achieving results that affect the business goals of the company. To achieve a strategic result, one needs to get a loan of trust, and, above all, to take responsibility, to a certain extent, become the “master” of some strategic area. In our case, the HR service needs to feel involved in the task of improving the productivity of employees and to take responsibility for its implementation.

HR function: impact of external factors

SWOT analysis is often referred to in the business literature as a tool for selecting alternatives when considering a strategy, and it is quite rare to mention that it can also be applied in the HR field. When using SWOT analysis, we are primarily concerned with the following areas of activity: recruitment, personnel development, project management, internal analysis of the organization. The purpose and capabilities of SWOT analysis in relation to the HR service is to map out what to do next based on objective information. It should be remembered that the strengths and weaknesses depend on the personnel management service itself, and the opportunities and threats must be sought outside.

Initially, it makes sense to evaluate the external factors. Opportunities often determine the direction of HRM development. To evaluate the reality of the use of a particular opportunity, the head of the HR department must answer several questions:

- How to convey to the top managers the benefits that one or another opportunity promises?
- Does the HR department have the resources and means to realize specific benefit?
- Will the HR service realize the opportunity better than an external provider?
- What is the economic efficiency from the realization of each specific opportunity?

Opportunities that are not related to external risks, to which the strengths are relevant, and which coincide with the strategy of development of the company as a whole are considered the best. External threats are possible adverse scenarios that, in the absence of safeguarding mechanisms, can lead to problems in the operation of the HRM. However, the insignificant threats can be ignored. Other threats require constant monitoring and development of action plan in the event of a particular threat.

After analyzing the external factors, one can move on to the assessment of the internal environment. It should be remembered that the analysis of internal factors is desirable to be carried out periodically, so as not to miss the opportunity to implement external positive factors and for the HR service to be constantly developed. One of the results of the analysis can be a plan to correct the identified deficiencies in the service. In this case, the plan can be both evolutionary and providing for a gradual change in the work of the service, as well as a revolutionary one, thanks to which a significant change in the work of the personnel service occurs - up to the transition of a part of business processes to outsourcing service.

The experience of the organization considered in this paper shows that there is a lack of coordination between the departments of the company when conducting a SWOT analysis. Therefore, it is very important to look at the working relationships between departments in general and employees in particular as a very significant factor in the internal environment. It is good practice to prepare an annual analysis in which each unit participates. At the same time, each unit is both a supplier and a consumer of services of other units. After evaluating and analyzing the internal and external factors, a table can be drawn up to ask additional questions (Table 1):

Table 1 Elements of interpretation of SWOT HR analysis data

Abbildung in dieser Leseprobe nicht enthalten

By compiling the answers to the above questions, one can get ready-made options for further actions. After conducting a SWOT analysis, a list of tasks for the HR department is compiled. It is also worth considering that initially it is not a detailed work plan that is drawn up, but strategic milestones in the work, the implementation of which will raise the work of the HR department to a new level HR department is compiled. It is also worth considering that initially it is not a detailed work plan that is drawn up, but strategic milestones in the work, the implementation of which will raise the work of the HR department to a new level.

[...]