Factors Affecting an Organization and HR Function - Paper Example

Published: 2023-12-28
Factors Affecting an Organization and HR Function - Paper Example
Type of paper:  Essay
Categories:  Company Management Human resources
Pages: 7
Wordcount: 1653 words
14 min read


The Human Resource (HR) function touches on the practices, policies, and systems that involve an organization's most critical assets. There is no single firm that operates in the absence of people. Therefore, we cannot separate the firm and HR Management from society. Similarly, factors affecting an industry will equally have an impact on the HR function. A well-developed organizational structure considers internal and external factors that influence its departments (Armstrong 2011, p41).

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SWOT and PESTEL Analysis

SWOT and PESTLE analysis are tools that a firm uses to study its internal and external business environment. A SWOT analysis focuses on the internal and external business environment. In this case, the organization has control of the internal factors (Nishadha 2020). According to SWOT, a firm should be able to identify its strengths. Strengths are the unique capabilities and resources that an organization possesses. The HR function requires a company to select, recruit, train, and hire the best.

Competitive advantage refers to having the best employees in terms of their skills and the ability to execute their roles. On the other hand, weaknesses refer to competitors' things better than the organization (All Answers 2018). For example, lack of employee training, insufficient employment benefits, and bad reputation are the factors that affect the organization and HR function.

According to SWOT analysis, opportunities and threats comprise the external factors. SWOT refers to a company's ability to identify favorable trends and conditions in the business. Kammar states that labor relations and regulations positively impact the HR function and the entire organization. Threats are the unfavorable conditions affecting the industry. Risks could be things that the competitors are doing better than the company. For example, a lack of financial sustainability is a critical threat. Hence, excluding the company's ability to offer competitive salaries to its employees.

The PESTEL model focuses more on the external macro factors affecting the organization. External factors are essential when a company is researching a new project. Political factors refer to government policies, laws, global guidelines, and rules and regulations that affect the organization (Nishadha 2020). Using Heritage Textiles, as an illustration, we examine the following four PESTEL factors that impact its business.


Dynamic changes are happening in the sector of technology. As a result, industries such as Heritage Textiles are actively adapting to these changes. With HRM, there is an increase in demand for technically skilled workers. Companies such as Heritage Textiles are continually altering requirements for a particular job to align them with demand for skills. Also, change in technology causes a shift in the employer's staffing needs.


Economic factors affect the financial status and wellbeing of the firm. When the economic conditions are favorable, organizations such as Heritage Textiles will have the ability to establish and implement new projects and expand their operations. On the other hand, adverse economic conditions may require the business to cancel or squeeze its budget. Regarding the HR function, Heritage Textiles may find it necessary to lay-off some of its employees or ask them to take voluntary unpaid leave.


The government requires organizations to function per the laws, rules, policies, and guidelines that it provides. Therefore, to ensure compliance, the management of Heritage Textiles runs its HR function following the legal framework. Labour relations as a common factor that has an impact on the HR function (Kammar). The primary role of labor unions is to bargain for better working conditions for their members. As a consequence, this will affect the company as well as its HR function. According to Shreyas, legislations affecting HRM in India are the Factories Act, 1948; Industrial Employment Act, 1946; The Minimum Wages Act, 1948; The Minimum Wages Act, 1948; Trade Unions Act, 1926, among others.


The political environment engulfs the effect of political institutions on the HR function of an organization. A stable political environment sets in a conducive business environment. Kammar asserts that politics affect all organization's operations, including the HR function. Specifically, politics shape HR decisions on planning, remuneration, recruitment, and terminations. In most cases, as the center of every political decision, the government will require businesses to operate under its political framework.


Ecology is the biology branch that addresses the complex interrelationship between the environment and living organisms (Nishadha 2020). In this context, the employees of Heritage Textiles might be affected by ecological factors. Climatic conditions, physiographic and biotic factors are environmental factors that affect organizations and the HR function. For example, heavy rainfall or high-temperature levels may affect the functionality of textile industries. Employees become unproductive while working within some ecological conditions.


Today, the world has become a global village and thus more demanding. Business cannot function in isolation because industries operate within a society (Armstrong 2011). When making business decisions, firms have to put into consideration the public interests at hand. A company has to put societal interests in priority to satisfy the community. HR managers have a critical task of ensuring that they meet societal needs and uphold social responsibility. Changes in lifestyle and increased consumer awareness, lifestyle, and media involvement affect the HR function (Nishadha 2020).

Forces which influence the HR agenda

The primary role of an HR manager is to acquire resources. These resources enable the firm to keep up with the changing demands of the workforce. The HR function's potential drivers include increased global awareness, demographics, technology, skills, labor law, supply, and need. With rapid changes in technology, there is an increase in the level of awareness among employees. Workers are now more aware of their rights (All Answers Ltd 2018). In case of violation, employees rely on labor unions to help in resolving employment issues. On the other hand, the HR department faces a more significant challenge of balancing societal needs and demographic changes with the HR function.

In dealing with these forces, organizations need to overlook their economic goal of minimizing costs and maximizing profits. On the other hand, a company must align HR strategies with those of the business. Nonetheless, HR management should be able to foresee changes and come up with suitable change management strategies. Filling the gap between the personnel and organizational goals is very important for efficiency in business functions. The HR managers should create a sense of ownership in employees, build a safe work environment, offer training, and timely communication to counteract these forces' adverse effects (Abdelaziz, Tamara & Abdullah 2015).

On the other hand, these forces can be beneficial to the HR function. Although technology outdoes human ability, there is a need for the integration of human-machine. The HR manager will ensure that the workers are up to date with technological advancements. By operating digitally, tasks become efficient and straightforward hence enhancing productivity. Also, globalization ensures that companies meet supply and demand for labor. Skilled and unskilled personnel have equal chances of accessing jobs. The quality of the HR function improves when there are positive impacts of the forces driving the HR agenda (Abdelaziz, Tamara, and Abdullah 2015).

Organizational and HR Strategy and Practice

Strategy formulation involves decision-making and planning in establishing strategic goals for the organization. Strategy implementation involves all the activities that the management engages in achieving strategic goals. The Analysis Formulation Implementation (AFI) identifies three stages of strategy formulation and implementation. As the name suggests, the AFI model links three distinct phases of strategy formulation and implementation. These stages are Analyze, Formulate, and Implement; hence, the AFI model. Strategic Management Process is another model that explains the strategy formulation and implementation.

The Strategic Management Process Model identifies six key steps.

  • Step 1: Developing of organization's mission and vision
  • Step 2: Gathering and analyzing information
  • Step 3: Establishing of strategy objectives
  • Step 4: Formulation of strategy
  • Step 5: Implementation
  • Step 6: Evaluation and control

Stages of strategy formulation using the AFI strategy framework

Stage 1: Strategy analysis

The first stage of strategy formulation and implementation involves understanding strategy and its importance and performing internal and external analysis. The internal analysis is the investigation of the firm's resources, capabilities, and core competencies. The external evaluation involves examining the strategic groups, competitive drivers, and industry structure. Other issues to put into consideration are a firm's competitive advantage, performance, and business models. At this stage, the management is developing and aligning the firm's mission and vision with the strategy.

Stage 2: Strategy formulation

At this stage, the organization analyses its business, corporate, and global strategy in terms of differentiation, cost leadership, and integration. Corporate involves decisions on vertical integration, diversification, strategic alliances, mergers, and acquisition. The global approach focuses on a firm's international competing ability.

Stage 3: Strategy implementation

This stage explains how to execute the strategy in plan and align it with the organizational culture, structure, and design. During implementation, the management should maintain control of its business ethics, leadership, reward systems, and functional networks. Besides, the firm continues with the strategic monitoring and evaluation of the plan.

HR role in strategy formulation and implementation and business ethics

The HR department plays a critical role in strategy formulation and implementation. At the initial stage, HR ensures that the firm develops a clear mission and vision. Also, the HR provides the strategic planning committee with information that it requires for strategy formulation (Armstrong 2011). HR function engagement is vital during the strategy formulation and implementation process since the personnel significantly impact an organization's strategic decisions.

The HR role in strategy implementation is to supply the organization with a skillful and competent workforce to enact the strategy. HR provides information about the internal strengths and weaknesses of the company. During strategy formulation and implementation, a firm will experience a dynamic work environment redesign. HR's responsibility is to ease the transition and assure its personnel that the changes are beneficial. The HR manager must ensure that his HR strategies align with business and corporate strategy.

Crane, Matten, Glozer, and Laura (2019, p91) states that the business's ethics ensure the leaders and the employees upheld the professionalism and integrity in their operations. HR's responsibility is to maintain high ethical standards when supporting the organization's decision that affects the people.

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