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Case 9: HR Strategy and Planning- Ethics and Outsourcing

After learning about various areas of HR, we also have to learn about human resources in a wider context of the company and the overall environment in which the company operates. 

As all other fields of business, also HR faces challenges that it didn't have to deal with in the past.

The first area of challenges are environmental. When I hear 'environmental' I immediately associate it with nature, climate changes etc. In the case of HR it is more about the overall situation (not only) in the working life, or in other words, those are factors that the department itself cannot directly change, rather it has to be prepared for those problems and have strategies to deal with them. 
  • The business world overall is changing very rapidly and that of course affects also the work of HR. 
  • Further, the rise of Internet also plays its role. We have heard from our guest speaker, how important it is nowadays to understand and be able to use the eHRM tools. 
  • With the raising migration, the need for dealing with a diverse workforce is also rising. For example within the European Union it is very common that people move to a different country to work, because they don't need any visa, permission,... and for some fields they might get better working conditions in other countries. 
  • The globalization is not only visible on the workforce but also in the economic situation- countries are highly interdependent on each other. 
  • A very important challenge are skill shortages, when I look at job advertisements in Finland for example, an overwhelming majority of the positions offered are in the field of computer science; software engineers, AI development, etc. those are the skills companies need and value the most nowadays, however most of the workforce does not have any or very little knowledge in those fields.
  • Not only the employers, but also the employees expect nowadays something different than in the past. People require better work-life balance, want to spend less time at work and want to be offered a wide variety of benefits. Companies that fail to be attractive enough in these areas might risk losing talented workers to competitors.
  • Less common at least in Europe, yet still not impossible challenges might be dealing with natural disasters or terrorism as an organization. This an increasingly important problem for example in American schools, teachers worry about their lives due to school shootings and require suitable protection and security.
The challenges in Finland are not much different, at least according to EurWORK. A specific for Finland is the problem of aging population together with the rising retirement age. Also, as in other developed countries, the immigration is rising- that means increased differences among cultural, religious or linguistics backgrounds. It is up to the HR department, whether they succeed in taking the advantage of the increasing diversity.

Next, there are the organizational challenges, those are mainly related to choosing the size of the workforce (downsizing, restructuring). Another challenge that belongs to this area is how large portion of decisions will be done by the HR department and by the management. Larger companies also have to consider, whether the HR functions (for example pay decisions) will be done centralized at the core of the organization or decentralized. 
Since entrepreneurship is becoming more accessible for larger amount of people, there are also many challenges for small businesses. HRM is usually not seen as a core operation at the initial stage of a new business, but as the business and thus the workforce is growing, the company has to figure out its organizational structure and set an HR department. 
Related to this issue, the book also talks about outsourcing. An increasing amount of businesses chooses to outsource some of its HRM functions as the businesses want to only focus on the core operations.

Finally, there are the individual challenges that represent the actual task of an HR department. We have mainly talked about those through out this course and they involve mainly:
  • matching people with the right job suitable for their skills and overall finding the right people, who would fit with the organization
  • ethical and fair treatment towards the employees and encouraging ethical and socially responsible behavior
  • motivating employees to increase individual as well as overall productivity
  • whether to empower employees and if so, which ones
  • accommodating employees and provide them with such environment that would prevent brain drain and keep a 'healthy' level of employee retention 
Now, looking aside from the challenges, every company has to consider, how to implement strategic HR. Successful implementation is crucial and provides a range of benefits. All of those are essential in today's business world. Strategic HR allows the company to increase the desired proactive behavior and implement strategic goal of the organization to the day-to-day work of employees. HR department has to actively search for gaps between company's current situation and the future and last but not least encourage line managers to be an active part of the strategic planning process.

Naturally, there are many challenges on the way as well and definitely not all companies succeed in this strategic process. The challenges represent the initial setting of the right strategic goals and whether their interpretation doesn't differ among different units. The next step is to find ways to achieve those goals and not get 'distracted' by day-to-day issues that naturally occur within the company's functioning. As the company develops, the strategies and goals might change over time. It is important to effectively maintain this change and make sure everybody is 'on the board' with the new interpretation.

The HRM must mainly follow the strategies set by the top level management, but it plays a crucial role in reinforcement. As mentioned above, the environmental factors have to be considered.  


Sources


Gómez-Mejia, L. & Balkin, D. & Cardy, R. Managing Human Resources. Pearson Global Edition. 8th edition.


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