The purpose of this briefing paper is to provide supporting information to compliment the group discussion at the CIPD branch conference attended by students and other CIPD professionals across all areas of organisations and levels of competency. The paper aims to explain the role of HR and the link to business management across the different organizational sectors, including an explorative approach to the context of contemporary business, equality and diversity, environmental, technical and governmental developments and its impact on modern business initiatives. Furthermore this paper will examine how these initiatives differ according to sectors in relation business profit, methods of analyzing performance and the influence of HR policies in managing and supporting change.
The second part of the paper will explore major factors impacting on the role of HR in all sectors in reference to: the economic situation, demographic and technological changes, globalization and the international issues currently being faced and the impact of government/EU decisions on organisations.
The final part of the paper will examine the role of HR in the business and environmental planning and the importance of obtaining and analyzing relevant data. It will also examine the importance of evaluating strategies.
The HRM of today’s contemporary business world is very different from its grass roots origins of the early 19th century welfare officers. The field has accelerated and progressed through the modernity of industry and the conflict of nations to the role of today’s HRM – From the secular roles of the 1920’s ‘labour managers’ separated from management and working in the fringes to today’s modern HRM with its specialist disciplines and entrenchment within management and the broader business context.
Modern HRM practice places the emphasis on its incorporation in the management teams of organisations. The reason for this way of operating is
to ensure that the HRM can assist the organisations more effectively in achieving organizational objectives.
Put in its simplest terms the involvement of HRM at management level allows for the input of HR policies and procedures to assist in the successful attainment of business objectives.
HR has varying degrees of input across all sectors of the UK economy. The UK economy can be broken down into the following sectors:
It is these divisions that I will investigate further and explain how they are structured and how HR operates in each. However before moving on to these sectors and looking at how HR operates in them we need to know a little about structures.
The type of structure that an organisation utilizes depends on the function, purpose size and sector. There are three main organizational structures that HR operates within: Functional, divisional and matrix. Functional structure is grouped on function and purpose. For example an organisation have a finance department, sales department and communications department that all work independently of each other. Each department has its own specialist skills. The drawback of this structure comes from the independence of each department and barriers and potential lack of communication between them.
Divisional structures are used in companies that are larger. This relates to smaller, semi-autonomous organizations operating under one umbrella. While the divisions have responsibility for their day to day running they still answer to a central authority. The final structure is matrix structure; this arguably is an amalgamation of both functional and divisional structures. This structure is typically used in large multinational companies.
The private sector relates to businesses or organisations that operate for profit for their owners and stakeholders. The structures of private sector organisation are flatter, less layered than the public sector. This is so that private sector organisations can be more market responsive. The role of HR in the private sector is a tool to achieve business objectives; it could be argued that there is often very little separation between HR objectives and business objectives. Due to this fact HR positions are quite often twinned with more generalist management functions and this sometimes results in smaller HR departments.
Whilst the intrinsic integration of HR and business objective could be seen as beneficial to the overall strategic goal of the organisation, it could also be argued that HRM then becomes a reactionary discipline; by managing the risks associated to attaining business objectives rather than being proactive. For example rather than developing a workforce to accommodate unforeseen changes within the sector by skilling up the workforce new staff would have to be taken on at cost to the organisation.
Public sectors are organisations that focus on the provision of services. Owned and funded by central or local governments their sole purpose is to provide services for those that cannot provide for themselves. For example; the provision of health & social Care. The structure of public services tend to be hierarchical and multi layered therefore HRM in the public sector differs greatly to that of the private sector. It is more people orientated and a knowledge based service underpinned by well-established policies and procedures responsible for empowering the workforce to be able to provide services.
As a result you will find that HR within the public sector especial that of local authorities is larger and multilayered with a division of specialist disciplines such are recruitment, training and development and employee relations. The negative impact of HRM within the public sector can be observed by the policies and procedures that are driving it. HRM becomes a discipline of policing and reinforcing the adhering of policies and procedures. Unlike the private sector this style of HRM draws away from managerial integration to a separate secular entity.
The 3rd sector consist of voluntary organisations, community groups and housing associations. It should be noted however that the 3rd sector contains a diverse range of organisations and those listed as example are not exhaustive. HRM input in the 3rd sector is very limited compared to the private and public sector. This is primarily due to the structure and need of the organisation. Smaller voluntary organisations tend to have fewer staff in general as well as fewer permanent staff. Therefore the need of HRM input is greatly reduced. When HR intervention is required it is often brought in on a consultancy basis or via a shared service arrange. For example community ambulances that are used by the less able and vulnerable people within communities are often funded via local authorities and as such certain shared services such as HR can be accessed.
One can observe from the above descriptions that in all sectors there is a common HR theme. Irrelevant of sector or structure the HR function exists to help the organisation to achieve their strategic goals. Whether that be increasing profit, more effective provision of services or increasing employee knowledge. The difference in HR provision is driven by business needs achieved by the intrinsic link to management.
So what can HR offer to these business needs? Traditionally HR can offer administrative, legal, organizational development and recruitment and retention expertise, more than this though HRM can add value to the organisation by transformation, adaptability and resilience to the changing needs of an organisation. To do this the HR professional has to take on three roles. The strategic partner, employee advocate and the change mentor.
The strategic partner concerns themselves with establishing HR objectives that support the organisation in attaining its business objectives. Therefore a strategic partnership would be able to design the roles of jobs for the maximization of profits in a private sector organisation or reward, recognize and strategically pay people to promote motivation thus achieving the organisations goals.
Employee advocate however concern themselves with the employees and the business environment. For example in a public sector environment such as an LGA they would be responsible for the employee development opportunities, ensuring that all the staff were up to date with training and being able to provide the best service they can in line with corporate objectives. Furthermore Employee advocate hat aims at increasing communication though out the organisation and empowerment through responsibility.
Finally change mentor. With every increasing and changing external factors on the business environment, organisations have to change and adapt too. The change mentor role is to facilitate and champion change linked with the strategic needs of the organisation. Change is something that the public sector is going through currently because of economic restrictions and diversity within communities. Therefore HR professional are having to change ways of working, staffing to reflect the diversity in the community in order to be able to meet communities specialist needs whilst mindfully trying to raise profit to negate the deficit in funding from central government.
The strategic integration of HR can be broken down into four categories:
1. Vertical Integration: This concerns the effectiveness of HR and its contribution to organisation goals. 2. Horizontal Integration: Concerns the efficiency of HR and the alignment of tools and systems 3. Integration in Work: The acceptance of HR
4. External Integration: The stability of HR.
The structure and function of HRM in an organisation is very much determined and linked to the different inputs and outputs in relation to business sectors and economic environment. HR is the transformational link between these inputs and outputs. The strategies and activities employed by HR are dominated by internal and external influences. Understanding these influences is crucial to the effective HR. Understanding these influence is done via the SWOT and PESTLEE analysis.