HRM objectives and influences: internal and external factors

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HRM Objectives and Influences

Internal influences on HRM objectivesCorporate objectives

E.g. an objective of cost reduction is likely to require HR to implement redundancies, job reallocations etc.

Operational strategies

E.g. introduction of new IT or other systems and processes may require new staff training, fewer staff

Marketing strategies

E.g. new product development and entry into a new market may require changes to organisational structure and recruitment of a new sales team

Financial strategies

E.g. a decision to reduce costs by outsourcing training would result in changes to training programmes

External influences on HRM objectives

Market changes

E.g. a loss of market share to a competitor may require a change in divisional management or job losses to improve competitiveness

Economic changes

E.g. the recession of 2009/10 has placed great pressure on HR departments to reduce staff costs and improve productivity

Technological changes

E.g. the rapid growth of social networking may require changes to the way the business communicates with employees and customers

Social changes

E.g. the growing number of single-person households is increasing demand from employees for flexible working options

Political & legal changes

E.g. EU legislation on areas such as maximum working time and other employment rights impacts directly on workforce planning and remuneration

Hard HRM

Treats employees simply as a resource of the business (like machinery & buildings)

Strong link with corporate business planning – what resources do we need, how do we get them and how much will they cost

Focus of HRM: identify workforce needs of the business and recruit & manage accordingly (hiring, moving and firing)

Key features

Short-term changes in employee numbers (recruitment, redundancy)

Minimal communication, from the top down

Pay – enough to recruit and retain enough staff (e.g. minimum wage)

Little empowerment or delegation

Appraisal systems focused on making judgements (good and bad) about staff

Taller organisational structures

Suits autocratic leadership style

Soft HRM

Treats employees as the most important resource in the business and a source of competitive advantage

Employees are treated as individuals and their needs are planned accordingly

Focus of HRM: concentrate on the needs of employees – their roles, rewards, motivation etc

Key features

Strategic focus on longer-term workforce planning

Strong and regular two-way communication

Competitive pay structure, with suitable performance-related rewards (e.g. profit share, share options)

Employees are empowered and encouraged to seek delegation and take responsibility

Appraisal systems focused on identifying and addressing training and other employee development needs

Flatter organisational structures

Suits democratic leadership style

Which is best?

The "hard" approach to HR might be expected to result in a more cost-effective workforce where decision-making is quicker and focused on senior managers. However, such an approach pays relatively little attention to the needs of employees and a business adopting a genuinely "hard" approach might expect to suffer from higher absenteeism and staff turnover and less successful recruitment.

The "soft" approach will certainly appeal to the "touchy-feely" amongst us who like to see people being treated nicely! And you can also make a good business case for an approach that rewards employee performance and motivates staff more effectively. However, the danger of taking too "soft" an approach is that when all the employee benefits are added up, the cost of the workforce leaves a business at a competitive disadvantage.