HUMAN RESOURCE PLANNING
LECTURE 3
Environmental Influences on HRP
Lecturer: Isaac Nyarko Adu
Email: inadu@uew.edu.gh/ iadu10@yahoo.com
Office: Business School Block
Learning Objective
By the end of this lecture you should be able to;
▪Identify the sources that HR planners use to keep
current with business and HR trends.
▪Find out how environmental scanning is practiced.
▪Discuss the challenges encountered in scanning the
environment.
▪Outline the environmental factors, like economic
climate, the political and regulatory context, and
the social and cultural climate, that influence the
practice of HRM.
Human Resource Planning – Isaac Nyarko Adu UEW
Introduction
▪To understand strategic HR planning, we must first
recognize how HRM is affected by the environment
in which it operates.
▪HR strategists need information concerning their
environment in order to exploit the opportunities or
cope with the threats.
▪Environmental factors may influence different
industries and businesses in a different way and to a
different extent.
Human Resource Planning – Isaac Nyarko Adu UEW
Introduction
▪Being responsive to environmental changes is a
prerequisite for building dynamic capabilities and
gaining competitive advantage.
▪Fear over pandemics, frequent power cuts, costs of
fuels, technological development, and the
workforce demographics all directly influence how
work should be designed and how HR should be
managed.
▪ Managers are influenced by the culture in which they operate….
Human Resource Planning – Isaac Nyarko Adu UEW
What? and Why? of ES
▪Environmental scanning (ES) is the systematic
monitoring of the major factors that influence
the organization.
▪Why monitor these factors?
▪ To identify the trends that might affect the
formulation and implementation of both the
organization and HR strategies.
Human Resource Planning – Isaac Nyarko Adu UEW
ES Sources and Methods
▪HR professionals must be responsive to these
environmental changes.
▪HR managers who understand the environment
and its implications for their organizations can
develop HR practices that create competitive
advantage.
▪ The environment consists of both the external
context, PESTEL and the industrial environment.
Human Resource Planning – Isaac Nyarko Adu UEW
ES Sources and Methods
▪The analysis of the external environment
consists of four stages…
Human Resource Planning – Isaac Nyarko Adu UEW
Sources of Information
▪ In the past, HR managers monitored changes that may
affect their programmes and policies by reading news
papers and trade magazines.
1.
• Publications
2.
• Professional Associations
3.
• Conferences and Seminars
4.
• Professional Consultants
Human Resource Planning – Isaac Nyarko Adu UEW
Sources of Information Cont.
▪Competitive Intelligence
▪ Competitive intelligence (or business intelligence) is
a formal approach to obtain information about your
competitors.
▪ The simplest method is to study their websites for
information about their strategies and plans.
▪ Some organizations hire competitors’ employees to
obtain insider information about future plans.
▪ When developing strategies and determining their impact
on an organization, HR managers rely on many sources of
information.
Human Resource Planning – Isaac Nyarko Adu UEW
Key Challenges in ES
1. Inability to accurately predict the future
▪ For instance, we cannot say what the world would
look like in 2050.
▪ Most HR strategists limit themselves to a 2-3 year
time frame and also infer from current trends.
Human Resource Planning – Isaac Nyarko Adu UEW
Key Challenges in ES
2. Isolating what really is important to HR
▪ The different changes that occur make HR scanners
unable to pick out the truly important events.
▪ So just as there is a reaction for every action, for
every trend there is a countertrend.
▪ Isolating the critical from the insignificant.
Human Resource Planning – Isaac Nyarko Adu UEW
Challenges in ES
Four criteria for identifying significant trends;
1. Are there ripple effects(changes in one aspect
impacts another)?
2. How profound are the impacts on people’s
priorities, roles, and expectations?
3. How large is the impact scope (number of
people impacted)?
4. Will the changes endure over time?
Human Resource Planning – Isaac Nyarko Adu UEW
Environmental Factors
1. Economic climate
2. Globalization
3. Political and legislative factors
4. Technological factors
5. Demographic factors
6. Socio-cultural factors
▪ In scanning each factor, you need to consider its potential impact on
the organization and strategy in the near future and which HRM plan
can be used in response to the environmental changes.
Human Resource Planning – Isaac Nyarko Adu UEW
Economic Climate
▪The economic indices are also important to the
HR strategists.
▪ Unemployment rate – affects their ability to recruit
▪ Costs of fuels – it affects employees’ willingness to
commute.
▪ Value of the Ghanaian cedi – it affects the company’s
ability to buy and sell products in the international
market, and thus affects employment levels.
▪ Interest rates – it affects how much a company is
willing to borrow to grow its business and invest in
employees.
Human Resource Planning – Isaac Nyarko Adu UEW
Economic Climate
▪Actions taken by HR managers to cope with the
economic uncertainty include;
1. Link employee performance with organizational
goals.
2. Increase expectations of employee productivity.
3. Put emphasis on succession planning and readiness.
4. Invest in leadership development.
5. Use non-cash rewards such as time off, time
flexibility, and learning opportunities.
Human Resource Planning – Isaac Nyarko Adu UEW
Globalization
▪Globalization is the growth in flows of trade
and financial capital across borders.
▪It affects sovereignty, prosperity, jobs, wages,
and social legislation.
▪As ECOWAS Free Zone Policy makes the workforce
mobile across its borders, Ghanaian businesses
need to work hard to retain the best knowledge
workers.
Human Resource Planning – Isaac Nyarko Adu UEW
Political & Legislative Factors
▪Through political programmes resulting in changes
to laws and regulations, government can influence
businesses.
▪For instance, through tax cuts, tax incentives and
tax holidays governments can create atmospheres
that emphasize job creation.
▪Such measures encourage businesses to invest in
that country and encourage consumers to spend,
resulting in more jobs.
Human Resource Planning – Isaac Nyarko Adu UEW
Political & Legislative Factors
▪The employer – employee relationship is governed
by a legal framework {Labour Act 2003 (Act 651)}.
▪HR managers need to monitor legislative changes
and ensure compliance with legal requirements.
Human Resource Planning – Isaac Nyarko Adu UEW
Technological Factors
▪Technology here includes tools, machinery,
equipment, and software.
▪Technology also transforms the organizational
culture of how work is done.
▪Examples: Telecommuting, teleconferencing.
▪ Issues of the protection of intellectual property and the safeguarding
of company secrets are made more difficult because of the ease of
transferring information using technology.
Human Resource Planning – Isaac Nyarko Adu UEW
Technological Factors
▪Impact of technology on organizations
1. Brought about changes in skills and work habits of
employees.
2. Eliminate some lower-level positions and layers of
management.
3. Telecommuting options.
4. Electronic monitoring and employee privacy.
Human Resource Planning – Isaac Nyarko Adu UEW
Demographic Factors
▪Labour market
▪ It is the most important demographic factor that
should be monitored by HR professionals because it is
where an organization recruits its employees.
▪ The number of people available for work depends on
factors such as; (i) the unemployment rate, (ii)
geographic migration, and (iii) graduation rates from
educational institutions.
Human Resource Planning – Isaac Nyarko Adu UEW
Demographic Factors
▪Workforce Diversity
▪ It has led to the abolishment of terms such as
“minority” and “majority”.
▪ Given competition for critical skills, organizations
that are able to exploit diverse talents will gain
competitive advantage.
Human Resource Planning – Isaac Nyarko Adu UEW
Demographic Factors
▪Generational Differences
▪ Baby boomers (born btn. 1946 and 1964) workers in their
50s. SS > DD…
▪ Baby busters (born btn. 1965 and the mid-1970s) workers
in their 40s. They are few and very well educated and
trained, so can command significant incomes.
▪ Gen X employees (born btn. 1965 and 1980) have lived
with technology all their lives.
▪ Gen Y employees (those born after 1981) are completely
comfortable with technology and have a more global and
tolerant outlook than people older than they.
Human Resource Planning – Isaac Nyarko Adu UEW
Demographic Factors
▪For HR managers, an important consideration is how
to vary HR practices to engage and motivate these
different generations of workers who also have
different work values and preferences.
▪HR managers also need to consider how to capitalize
on Gen Y employees’ knowledge and skills during the
short period when they are hired by the company.
Human Resource Planning – Isaac Nyarko Adu UEW
Demographic Factors
Human Resource Planning – Isaac Nyarko Adu UEW
Socio-cultural Factors
▪Work-life balance
▪ Research on hours worked indicates that employees
in the banking sector spends more time at work.
▪ Many employees face the challenge of trying to
spend quality time with their families while
vigorously pursuing a career.
▪ Organizations have responded to this issue by
increasing workplace flexibility including flex-time,
part-time, job sharing, elder care, child care and
telecommuniting.
Human Resource Planning – Isaac Nyarko Adu UEW
Socio-cultural Factors
▪Contingent workers
▪ Another significant trend is the continuing growth of
contingency workers (i.e., part-time, temporary,
seasonal, and contract workers).
▪ As these modes of employment continues to
increase, HR needs to consider how to strategically
manage these employees so as to gain competitive
advantage.
Human Resource Planning – Isaac Nyarko Adu UEW
Socio-cultural Factors
▪Violence at work
▪ Research estimate that 5% of female employees in
Canada and 4% of male employees reported being
physically assaulted on the job (Duncan, 2002).
▪ For instance, in Ghana healthcare providers and
those in the enforcement or inspection agencies are
at higher risk.
▪ Also included are those who work alone at night.
Human Resource Planning – Isaac Nyarko Adu UEW
Responding to External Factors
▪Due to the limited time and resources in
monitoring these environmental factors, most
organizations use;
1. Issues priority matrix
2. SWOT matrix
Human Resource Planning – Isaac Nyarko Adu UEW
Issues Priority Matrix
Human Resource Planning – Isaac Nyarko Adu UEW
SWOT Matrix
Human Resource Planning – Isaac Nyarko Adu UEW
•Thank you
