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In a context of continuous evolution of the environment both internally and externally, the change is being presented more as a necessity rather than a luxury or a choice. Indeed, when the environment changes the company which refuse to make necessary modifications both in terms of attitudes and behaviours puts herself at risk on inadequacy of its context: which means that it is likely to be in phase shift with the current world another by the development of competition that inevitably tends to condemn businesses less adapted.
That's why companies must remain vigilant because there are increasingly external factors able to influence their futures. One of the roles of the Human Resource Management is to be collected and be aware of changes in the environment of the company and their consequences for this one. The environment being essentially in perpetual motion and constant progress, the prediction and recognition of changes should allow companies to adapt and transform themselves adequately.
"Don't deal with change its inevitability expose yourself to disappear " P. WATZLAWICK (1980)
But first we will analyse which are the external environmental factors able to influence a business or a company.
EXTERNAL FACTORS AFFECTING A BUSINESS
There are many factors that affect the Company's business and the results of its operations, some of which are beyond the control of the Company. The following is a description of some of the important factors that may cause the actual results of the Company's operations in future periods to differ materially from those currently expected.
Pearce and Robinson (2002) discuss four external forces economic, political,
social and technological. Each external factors influences corporate strategy. While these descriptions are generally accurate, they may give the false impression that the components and factors are easily identified, mutually exclusive, and equally applicable in all situations (Pearce & Robinson, 1985, p 121). In fact, forces in the external environment are so dynamic and interactive that the impact of any single element cannot be wholly disassociated from the impact of other elements.
Businesses need to make money to continue to exist. The economy has a significant impact on the viability of a corporate strategy. For example in property market, because of the recession prices of houses are now decreasing in London.
So, It's an understatement to say the current recession is hurting business owners. Economic environment refers to economic policies of the government , the business cycles, the socio-economic infrastructure etc. The successful businessman visualizes the external factors affecting the business, anticipating the prospective market situations and makes suitable to get the maximum with minimize cost.
The current political climate can influence the types of legislation that can influence corporate spending or tariffs on goods and services which means political factors can be restrictive or beneficial.
Restrictive factors are those factors that limit profits; such as tax laws, minimum wage legislation or pollution laws as cited in Pearce and Robinson, (1985). Governmental influences are of particular interest for those enterprises that operate in foreign countries.
The social dimension of a nation determines the value system of the society which affects the functioning of the business: in others words changes in the structure of the population, and in consumer lifestyles and behaviour affect buying patterns.
CERTO (1997, p. 51) defines social responsibility as a managerial obligation to take actions that protects and improves both the welfare of society as whole and the interests of the organization.
The development of new technology has directly affected the function of the organization. Technology factors are the scientific advances, which influence the competitive position of the enterprise. Maintaining awareness of new technologies decreases the probability of becoming obsolete and promotes innovation.
In summary, the external environment of a business plays a principal role in determining the opportunities that a firm faces. Consequently, the Human Resources Managers have a important role to play to be sure that the company take into consideration the external environmental factors.
ROLE OF HUMAN RESOURCES MANAGERS
Human resource management is a strategic and coherent approach to the management o an organization most valued assets: the people working there who individually and collectively contribute to the achievement of its objective. Futhermore good Human Resource Manageement must be aware of any change or external environmental factor which can influence the company.
Human Resource Management aims to help the organization to achieve success through people. As Ulrich Lake (1990) remark " HRM systems can be the source of organizational capabilities that allow firms to learn and capitalize on new opportunities " .
However, according to STOREY (1989) sometimes the decisions made by the Human Resource Management to face the external factors are both hard and soft.
The SOFT roles of Human Resource Managers
Ulrich 1998) suggests that enviroenmnetal and contextual changes present some challenges to organizations which means that Human Resource has to be involved in helping to build new capabilities. These comprise:
Globalization which requires HRM to move people , ideas and informations around the world to meet local needs.
Profitability through growth : the drive for revenue to grow means that HRM must be creative and this means encouraging the free flow of information and shared learning among employees
Organizational and individual learning : systematically developing organizational and individual learning processes; providing employees with learning opportunities , including e-learning , to develop their capabilities , realize their potential for them to be totally conscious of all the external environmental factors.
Technology: the challenge is to make technology a viable, productive and update part of the work setting.
HARD roles of human resource management
The hard approach to Human Resource Management emphasizes the quantitative, calculative and business-strategic aspects of managing the headcount resources.
It adopts a business-oriented philosophy which focuses on the need to manage people in ways that will obtain added value from them. Also is the mistake of taking bad decisions which are not in similarities with the exterior changes and movements.
Overall it's important to a company to have a good Human Resource Management which is aware of all the changes that can be happen in her external environment. To clearly know them all will help Human Resource Managers to apply some HR practices to gain sustainable competitive advantages.
HUMAN RESOURCE MANAGEMENT FOR SUSTAINABLE COMPETITIVE ADVANTAGE
The role of the Human Resource Manager is evolving with the change in competitive market environment and the realization that Human Resource Management must play a more strategic role in the success of an organization. Human Resource practioners must have the capacity to identify business opportunities , and to understand how their HUMAN RESOURCE role can help to differnciate the company to the others and finally achieve the company's business objectives.
With the increase in competition , locally or globally, organizations must become more adaptable , resilient ,agile and customer -focused to succeed. In order to succeed , Human Resource must able to influence key decisions and policies.
The question then is what really the firm should do to maintain or to optimize its situation in its environment? Should it focus on its financial situation, its technology,or its human resources?
To answer this question we would first,compares researchers conclusions:
Coff 1994 argues that human assets are a key source of sustainable advantage because of causal ambiguity and systematic information making them inimitable.
Guest 1990 says that if management trust their wokers and give them challenging assignments, workers in return will respond with high motivation, high commitment and high performance.
Gratton 1997 identified six factors or success: the commitment of top management, the motivation and aspirations o recruits , the core capabilities of the management team , the team`s aspiration, its ability to build and maintain alliances and the integration of the business into a global network.
It means that sources of competitive advantage have shifted from financial resources to technology resources and now to human capital. Now that we know that employees are one of the sources of competitive advantage, what do we have to do to achieve competitive advantage through them? In other words, what are the human resources practices to gain sustainable competitive advantages?
According to the answer is simple and consist on two actions:
Cost Leadership Strategy: the primary ocus of a cost leadership strategy is to achieve low costs relative to competitors. Lowering costs lead to lowering prices , which can increase demand for products or services . This is the case of ASDA supermarket in London which believe to have a policy of prices more cheaper than all of their competitors. However if the product can not be produced at a lower cost it also reduces profits margins. To compete based on cost, managers must address other costs and design a system that lowers the cost per unit of the product or service.
Differenciation Strategy: the primary focus of a differenciation strategy is Creating uniqueness such that the organizations goods and services are clearly distinguished from those of its competitors . In other words the focus is on creativity and innovation which have long been recognized as necessary for bringing the required change to obtain the competitive advantage. But SHULER AND AKSON 1987 have divided the differenciation strategy in 3 small groups:
Innovation strategy: the primary focus here is developing products different from those of competitors or offering something new and different . For example when the company APPLE introduced on January 9, 2007 the first iPhone.
Quality enhacement strategy: the focus here is enhacing the product . quality enhacement often means changing the processes of production in ways that require workers to be more involved and more flexible.
Cost reduction strategy: firms typically attempt to gain competitive advantage bu being the lowest cost producer .
But for all this to be possible, HRM must be careful to choose the right people, in the right way, which means:
*employees with more competencies
*employees who have more ideas that are implemented
*employees with higher customer satisfaction,bonus rates and promotion rates
*employees who produce more return for every dollar of salary paid to them.
The role of the HR manager must parallel the needs of the changing organization. Successful organizations are becoming more adaptable, resilient, quick to change directions, and customer-centered. The primary function o human resources today is to ensure the effective and efficient use of human talent to accomplish an organization goal and objectives. Using human resource as a competitive advantage means analysing what factors are necessary for the organization long term success.