External Environment Analysis of Human Resource Policies - Essay Example

?Sainsbury’s: External Environment Analysis of Human Resource policies and practice Introduction Human resources policies and practice encompass all the functions of an organization. The analysis of human resource policies and practice, though reflect the overall assessment with reference to a company, lends focus to Human Resources Manger to identify the macro environmental factors which will have impact on the organization and the management of the company’s human resources. Several models have been used for environmental analysis relating to an organization. In SWOT analysis, an acronym for Strengths, Weaknesses, Opportunities and Threats, opportunities and Threats are related to external environment. This paper seeks to analyze Sainsbury’s external environment with regard to human resources and practices. Sainsbury’s is a leading retail chain in the UK with interests in banking and financial services is the third largest in the country. The family owned business had grown to become the largest grocery retailer in the UK and pioneers in self-service supermarkets. The company listed in the London Stock Exchange has a very large family of shareholders, and it is a constituent of FTSE 100. After a brief downfall, the company has reemerged with greater vigor in the new millennium. BBC news (2001) stated “The figures represented the third quarter in a row of sales growth "significantly better" than in 2000… Sir Peter, credited with revitalizing the Prudential in the mid-1990s, has been working the same trick at Sainsbury's after replacing Dino Adriano as chief executive early last year”. External environment and HR Policies and Practice There are several tools and concepts for the analysis of the external environment in relation to a company. The analysis of PESTLE, an acronym for Political, Economical, Social, Technological, Legal and Environment, is effective in respect of the macro environmental factors in relation to the current as well as future operations of a business. PESTLE is a transformation of PEST useful in market research. Over the period of time ethical and demographic dimensions are included in this analysis, and the concept has taken several forms such as PESTLIED and STEEPLE. (Rapidbi, 2007) Latest developments with regard to corporate social responsibility (CSR), environmental protection, ethical and demographic factors are increasingly relevant in the macro environmental analysis. Apart from the shareholders, there are number of stakeholders in a company which includes community as well as it provides necessary infrastructure and human capital for an organisation. Moreover, it is important to note that an organisation is also a part of the community. The analysis of Sainsbury’s is made with the theoretical background of PESTLE in this paper. The human resources policies and practice need to take into account the important points with reference to the external environment discussed under PESTLE analysis discussed, for exploiting the opportunities available and to avoid the threats from the external environment. PESTLE Analysis PESTLE analysis covers the macro environmental factors, and an organization's internal environment, strengths or weaknesses are not covered in this analysis. Morris & Jones (1995, p. 73) observed “To the extent that firms are adjusting their HRM practices to reflect turbulence in the environment, it would seem the HRM function is in fact becoming a more strategic function”. Therefore, the HR policies and practices are not restricted to ‘personnel’, but refer to the strategic role of HRM in the business for its sustainable development. Political  Increase in food prices, partly due to government policy to encourage bio fuels in various countries which has brought down the area under cultivation of food crops, is a cause for concern to the consumers and the industry. The allegation of price fixing is a serious impediment to the growth. Poulter (2008) stated “Supermarkets and big brands could face fines of more than ?300million after claims they colluded on the price of food and health and beauty products”, and it includes Sainsbury’s. Political attitude towards union movements and labor relations and the government’s environment and health policies influence the HR policies and practice significantly. According to letsrecycle.com, the Secretary of state Caroline Spelman has commented that “Defra [Dept. for environment food and rural affairs] is specifically charged with working towards a zero waste economy, encouraging paying people to recycle and working to reduce littering.” For instance, in accordance with the government’s policy of promoting greater energy recovery from food waste (via anaerobic digestion) and waste wood (via combustion) to capitalise on the potentially significant energy and carbon benefits, HRM needs to draw up programs to educate and train the people in waste management processes.   Economic The factors such as unemployment and inflation level in the country, BPO (business process outsourcing), privatization, GDP, credit crunch and, tax rates have direct influence on matters such as recruitment, compensation, promotions, annual increments an incentive schemes. Patrick & Peter (1988, p. 46) observe “Not only is HRM being exposed to more external factors on a national level, but also there are factors on the international level that are having increased trans-border impact on HRM operations”. In the business side, the muted demand and reduced demand in the retail sector, especially for luxury products and financial services is expected to continue for some more time since economic revival is elusive. The import and export policies also influence the company policies greatly. The monetary policies of the central banks relating to interest rates, exchange rates and money supply and the changes in the taxation rates by the government in the budget would have direct impact on the consumers and consequently on the company. The HR Manager has a challenging role in avoiding industrial disputes in such a situation for maintaining industrial peace by improving the morale of the employees and their commitment to the organization. Social Awareness among the consumers about healthy eating habits presents an opportunity for expansion into healthier foods. HR should embark on training programs to educate the consumers in health aspect of foods and the environmental aspects in general taking into consideration the changing tastes and fashions of the consumers. Technological  The introduction of new technologies and upgrading of the existing technologies becomes necessary in line with the developments taking place globally to be competitive in the business. The HR policies and practices should be in tune with these developments and it necessitates training to the employees at all levels in the operations. The recruitment strategies need to be reoriented to suit the needs of the changes. The advent of mobile telephony and the developments in the field of telecommunications, internet, media and social networks have created new opportunities for expanding online business. British Shopping.com (2011) states “At Sainsburys online store you can do all your grocery shopping as well as buy products from their extensive range of products”. This should reduce the inconvenience of waiting in checkout queues in the super markets. Evolving new strategies through employee participation in tune with the technological developments to satisfy the consumer needs is essential for sustainability which requires coordination on the part of HR with various divisions of the business. Legal  The HR manager deals with various laws relating to industrial safety, health, sexual harassment, working conditions, working hours, holidays, workers’ compensation, retrenchment and other laws related to working in factories and establishments, apart from the employment and contract laws. The HR has to pay attention to the disposal of waste, adoption of the best practices in packaging, labeling policies, quality standards and the expiration of the products which call for constant review of the policies and practices in line with the industry standards and statutory guidelines. Infixion Media (2010) states “Sainsbury's is to overhaul labelling on its products this month to ensure goods such as meat carry clearer country-of-origin information on the packaging”. Legal compliance with regard to financial services and risk management are of paramount importance when there is turmoil in the financial services sector. Environmental  Carrington (2011) states “Laptop computers, real-time energy displays and smarter heating have enabled the UK government department responsible for climate change to surpass its 10:10 campaign pledge to cut its carbon emissions by 10% in 2010. The Department of Energy and Climate Change (Decc) cut its carbon footprint by 20%, compared with 2009”. Energy consumption within the company needs to be rationalized and effective policies evolved for efficiency in energy consumtion. Carbon Reduction Commitment (CRC) Energy Efficiency Scheme proposed to cut carbon emissions by 1.2 million tonnes of carbon per year by 2020. Carbon footprint (2011) states “The CRC is targeting large non-energy intensive private and public sector organisations within the UK, whose combined electricity use through half hourly metering exceeds 6,000 MWh per year. Also, the HR should evolve procedures to ensure that the products procured are made of environment friendly manufacturing processes. According to Preuss (2008, p. 744), three distinct groups of CSR issues were identified, namely employment conditions for supplier employees, environmental protection in supplier plants and economic issues affecting supplier firms. Organizations working for animal welfare and against child labor are growing in strength, and therefore, it is important to review the policies and practices wherever necessary to avoid controversies and explore opportunities to promote new products. Demographic Availability of human resources is constrained by so many factors such as age, qualification, experience, sex, and skills. In an organization with nationwide stores, the problems are aggravated by labor turnover. HR policy in respect of wages, benefits, career development and incentive need to be conducive for the employment in the organization. The movement of people from place to place and country to country for employment makes an organization cosmopolitan in nature. The HR policy needs to use this synergy through strategic management of the labor force for the growth of the company. Ethical Apart from the corporate social responsibility of a company towards its various stakeholders, ethical behavior of an organization toward the environment, treatment of animals, child labor and other aspects which vary from organization to organization are under close watch by the media, the stakeholders, community and various agencies in the society. Differential pricing is considered unethical and Levy, kopalle, Grewal & Hess (2007, p. 11) observe “Because pricing optimization makes it possible to use differential price policies in different regions, it is important to examine how consumers react to this method”. Future trends and likely impacts A study by Cascio (1993, p. 1) reveals three important issues in HRM: the role of human resources in international operations; managing a multi-cultural workforce; and developing management talent in a global business environment. Constant review of the HR policies and practice to keep in tune with the developments taking place in the external environment is essential for a sustainable development of an organization. Also, in the backdrop of liberalization and globalization, alertness on the part of the HRM is called for in view of the new dimensions added to the business. The relentless growth in technology, telecommunications, media and social networks has increased awareness of the consumers which is reflected in the demand for environment friendly products and reduced carbon foot print in the food products. It necessitates the companies, especially in the retail chain on account of their contact with the consumers on day-to-day basis, to reorient their retail strategies. This requires continuous training and upgrading of the skills of the employees through training programs structured by HRM. Waste management is another area where a retail chain can contribute for recycling and renewable energy by generation of electricity from biogas out of waste thereby avoiding land filling. Letsrecycle.com (2005) states “a debate was held this week at the Valpak annual conference in the West Midlands over whether there should be any mechanism within the UK producer responsibility system to favour domestic recycling above exports”. Therefore, innovations in the field of pollution control, renewable energy, recycling of waste and reduction of carbon foot print are very important for a sustainable growth in the long run. Vasileiou & Morris (2006, p. 318) states: “Participants in the food supply chain beyond the farm gate, encouraged by a mix of market and regulatory drivers, have sought to assess and improve the sustainability of the food supply chain (e.g. M&S, 1999; Sainsbury, 2004; Unilever, 2004; MAFF, 1999; Defra, 2001). Environmental legislation targeting resource use, waste generation and pollution risk, including new regulations on the food processing industry under the Integrated Pollution Control Regulations 2000, has been a key mechanism for promoting greater sustainability”. The role of HRM in Sainsbury’s with focus on grocery retail becomes important on account of statutory pressures expected to emerge in the near future due to government’s commitment to reduce pollution in a time bound manner in future. Conclusion There are several pressure groups existing within the society which express their resentment through public demonstrations or boycott movements. HR policies and practices play an important role in integrating the company with the society on a positive plane for sustainability. It is also important to note that the same pressure groups are also instrumental in rewarding the socially responsible companies by extending patronage. This is reflected in the success of the environmentally screened market instruments. If the human resources are properly organized and motivated in addressing the changing needs of the society, the results would be phenomenal. Strategic HR planning in line with the changes in external environment is necessary for identifying the important variables such as changes in the tastes and fashions or demand pattern of the consumers for addressing these issues effectively. References BBC News, 2001, Sainsbury’s trumpets continued revival, 24 October 2001, viewed 25April 2011, British Shopping.com, 2011, viewed 25 April 2011, Sainsburys, Carbon footprint, 2011. Carbon Reduction Commitment (CRC), viewed 25 April 2011, Carrington, D., 2011. Decc surpasses 10:10 pledge to cut emissions by 10% in 2010. Guardian.co.uk, 7 February 2011, viewed 25 April 2011, Cascio, W. F., 1993, ‘International Human Resource Management Issues for the 1990s’, Asia Pacific Journal of Human Resources, Volume 30, Issue 4, pp. 1-18. Infixion Media, 2011, Sainsbury’s to overhaul food labeling, viewed 25 April 2011, Letsrecycle.com, 2005, Sainsbury's defends export of UK packaging waste, 22 September 2005, viewed 25 April 2011, Letsrecycle.com, 2010, Policy, viewed 25 April 2011, Levy, M., kopalle, P.,Grewal, D. & Hess, J., 2007, ‘Emerging trends in retail pricing practice: Implications for research’, International Retail and Marketing Review, viewed 25 April 2011, Morris, M. H. & Jones, F. F., 1995, ‘Relationships Among Environmental Turbulence, Human Resource Management, and Corporate Entrepreneurship’, Journal of Business and Entrepreneurship, Volume 7, Issue 1, pp. 61-77. Patrick, M. V. & Peter, B. J., 1988, ‘Trends in International Human Resource Management’, Journal of Human Resources, Volume 26, Issue 1, pp. 46-53. Poulter, S., 2008, Supermarkets facing huge fines over price-fixing claims on big-brand items, Mail Online, 26 September 2008, viewed 25April 2011, Preyss, L., 2008, ‘Ethical Sourcing Codes of Large UK-Based Corporations: Prevalence, Content, Limitations’, Journal of Business Ethics, Volume 88, Issue 4, pp. 735-747. Rapidbi , 2007, The Environment Scan – Environmental Organizational Scanning, viewed 25April 2011, Vasileiou, K. & Morris, F., 2006, ‘The sustainability of the supply chain for fresh potatoes in Britain’ Research Paper, Supply Chain Management, Volume 11, Issue 4, pp. 317-327. Read More