Although it is presumed that Human Resource Management (HRM) strategy is determined by the internal environment of a particular organization, one should not underestimate the influence of external factors. Thus, successful HRM planning is nowadays impossible without taking into consideration the current political, economic, and technological conditions.
To begin with, one is to note that political and economic background defines all the levels of the corporate strategy of any company. Even though HRM aspect might seem less susceptible to the external changes than, for example, financial or partnership fields, HR policies are still adapted according to the latest economic trends. The most vivid evidence of the economic factor’s influence on the HR targeting is the increase or the fall of the domestic market’s demand.
This factor may lead either to the reduction or the rise of the unemployment level. Moreover, national economic policy, along with the international commercial conditions can largely define the type of labour required – the high demand for higher-skilled employees is apt to have a significant impact on the company’s HR strategy, particularly its training issue (Sparrow 2010). While analyzing the influence of the economic environment on the HR strategy, one can turn to the example of the European Union’s (EU) economic structure.
The single market and the free money turnover within the EU’s borders permit professionals to get occupied in any country that belongs to the union, and all the European companies have necessarily adjusted their HR policy to this condition. According to the latest research, the shared market has contributed to the general improvement of the employment environment by creating several million workplaces in a relatively short period (Perkins & Shortland 2006).
However, it is not only national economic policy that plays a considerable role in the HR planning. The global economy is of equal importance for the human’s management. Thus, it is widely known that a global crisis is likely to make the HR managers reconsider the existing manpower policy. As far as economic instability leads to mass job cuts and dismissals, many firms prefer to abstain from the staff increase during the crisis period in order to prevent the default of obligations on the corporate side.
Meanwhile, one should point out that an economic environment cannot exist independently from the current political conditions. In fact, any aspect of HR policy is to be planned according to the government regulations so that the company can perform its activity remaining within the law. Whether it is recruitment or training, HRM managers cannot plan these aspects regardless the relevant labour code or any other document regulating the employer-employee’s relationships (Bamberger, Biron & Meshoulam 2014).
It is necessary in order to prevent workers from all kinds of injustice including discrimination, health and safety endangering, or unfair dismissals. Another way how the government can influence the internal HR factor is its activity aimed at developing the highly competitive market. The increase of market rivalry makes the managers develop their HR strategies in two simultaneous directions. Their first concern is to preserve the existing corporate team and prevent the workers from defecting to the competitors.
At the same time, the company is interested in engaging the most qualified and professional specialists in their group under the highly competitive climate (Armstrong 2011). Furthermore, internal HR strategy depends significantly on the general political rhetoric of the country.
Hence, if the authority announces the focus on international cooperation, the HR strategy might then imply a certain activity aimed at recruiting foreign specialists. On the contrary, the severance of diplomatic relations between the countries can prevent the managers from recruiting people of the relevant nationalities.
In order to analyze the meaning of the economic and political context in the HR strategy, one might consider several case studies. First of all, the relevant impact can be pursued upon the example of the globally known H&M fashion corporation. According to the corporate report, one of the main targets of the company’s activity is to provide the customers with the high-quality products taking into account the economic environment and adjusting the prices to the purchasing power of its customers.
Thus, the H&M’s HR department puts a special emphasis on employing the cost-conscious experts. Moreover, as far as the company is a multinational player in the global market one of the aspects of their strategy is its awareness of the necessity to adapt the HR policy to the laws and regulations of the country they work in. Thus, the HR managers claim that the employment procedure is performed in reliance on both the internal H&R program and the laws of their partnering country (Hennes & Mauritz (H&M), an HRM Case Study 2009).
Another example of the interconnection between the HR strategy and the general economic environment is represented by the USA IBM company. According to the specialists, the company’s HR department experienced the powerful influence of the economic conditions in the early aughts.
Thus, the economic crisis of the relevant period and the instability of the international market made the authorities introduce special HR measures to maintain the client’s demand on the one side and the corporate encouragement on the other side.
The chief IBM executive, Randy MacDonald, admits that during the crisis years, the economic situation did not allow them to think of expanding the company’s staff, on the contrary, the major concern of the HR specialists was to work out a strategy that would prevent the job cuts within the company.
He says that he also had to face several challenges connected with political peculiarities of the partnering countries when his company was trying to turn into a global player. Thus, the contradictions between Australian and EU’s privacy systems complicated the development of the talented-focused strategy and made the IBM managers search for alternative decisions and approaches (Boudreau 2010).
In conclusion, one should point out that HRM strategy is equally determined by the internal and external factors. The current political and economic contexts create the framework within which the HR management has to operate.
Reference List
Armstrong, M 2011, Armstrong’s Handbook of Strategic Human Resource Management, Kogan Page Publishers, London.
Bamberger, P, Biron, M & Meshoulam, I 2014, Human Resource Strategy: Formulation, Implementation, and Impact, Routledge, New York.
Boudreau, JW 2010, IBM’s Global Talent Management Strategy: The Vision of the Globally Integrated Enterprise. Web.
Hennes & Mauritz (H&M), an HRM Case Study 2009. Web.
Perkins, S & Shortland, S 2006, Strategic International Human Resource Management: Choices and Consequences in Multinational People Management, Kogan Page Publishers, London.
Sparrow, P 2010, Handbook of International Human Resource Management, John Wiley & Sons, Chichester.