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Identify an organisation to use as a focus for your paper. Using the PEST model as a framework identify the issues that will inform Human Resource planning decisions for the organisation in 2011. Using previous research evaluate the possible future labour market scenarios for your chosen organisation. Critically assess the arguments for and against investment in Human Resource initiatives at this time.
Table of Contents
3.Evaluation of Theories, Models, and Literature 3
4.Practical Implications 5
4.1-PEST Analysis for Sainsbury 5
4.2-Human Resource Gap for Sainsbury 6
4.3-Arguments for and Against Investment in Human Resource Initiative 6
The paper addresses the issue in the area of human resource development and planning. It uses the PEST model to predict the future labour market scenarios for Sainsbury. The advantages of disadvantages of PEST model have been evaluated and the theories, models, and literatures in the area have been assessed. Moreover, the human resource gap in Sainsbury which is crucial for it to achieve further growth has been identified. It is suggested that Sainsbury should invest in human resource initiative even during the recession and the Leadership Pipeline model of succession planning has important implications for Sainsbury in developing valuable human resources internally.
The aims of the paper are to use Sainsbury as a scenario and identify the issues that will inform human resource planning decisions for the company in 2011 by applying the PEST analytical model, to use a variety of secondary sources as well as previous research findings to evaluate the possible future labour market scenarios for Sainsbury, and to critically assess the arguments for and against investment in human resource initiatives at this time.
The PEST analytical tool has been used as a framework to conduct the analysis of Sainsbury’ external environment and predict the possible future labour market scenarios for the company. The implications generated by the PEST model will be used for the company’s human resource planning. The information needed for the PEST analysis will be collected from a variety of secondary sources such as Sainsbury’s latest annual report, internet, journal, book, and other relevant reports. In addition, a number of theories, models, and literature in terms of human resource development and planning have been selected and evaluated to justify the arguments for and against investment in human resource initiatives.
Evaluation of Theories, Models, and Literature
Human resource planning is defined as an articulated business strategy based on current and future business forecast for the acquisition, utilisation, development, and retention of an organisation’s human resources (Sharma, 2009). It focuses on analysing an organisation’s HR needs according to the changing internal and external conditions, and then developing relevant strategies to help the organisation to respond proactively to those changes (Rothwell and Kazanas, 2003). The human resource planning process involves four main activities including investigation and analysis of the organisation’s internal and external conditions, forecasting to identify the HR imbalance, developing resourcing and retention strategies, and utilisation and control through HR techniques. During the scenario planning stage, the PEST analytical framework can be used to scan the environment systematically and assess the environmental changes which would influence the organisation’s strategy (Armstrong, 2009). It is suggested that changes in economic, technological, geographic, demographic, governmental, and social conditions requires an organisation to find a way to predict long-range HR and talent needs (Rothwell and Kazanas, 2003). The PEST model can be used to address some of the factors mentioned above. More specifically, the model includes four key elements including political factors, economic factors, socio-cultural factors, and technological factors. It is suggested that the implications of these factors can help an organisation to predict trends of the labour markets in the future and identify potential issues related to the human resources of the organisation so that the organisation can develop relevant HR strategies to address these issues proactively (Armstrong, 2009).
The PEST model has a number of advantages. Firstly, it can facilitate a better interpretation of the macro environment which the organisation operates in. Secondly, it can help the organisation to identify the potential issues and opportunities in the business environment. Thirdly, it enables the organisation to predict the future opportunities and risks. Fourthly, it can encourage the organisation to think strategically in addressing these emerging opportunities and issues (Salva, 2011). Despite these advantages possessed by the PEST analytical mode, it also received some criticisms. For example, the PEST model is accused of simply listing some bullet points so it requires further interpretation of these factors to generate useful implications while these interpretations are largely subjective and lack of (Henry, 2008). Also, the analysis process of PEST model requires high quality data while it is time consuming and challenging to get access to these data sources (Salva, 2011). Moreover, due to the rapid changing speed of the external environment, it is difficult to keep the analysis up to date and the prediction of the future trend of the environmental changes might not be accurate (Salva, 2011). Based on the analysis of organisation’s external environment by PEST model, the future labour market conditions can be identified. On the other hand, the human resource gap for the organisation can be identified based on the internal analysis of the organisation’s future growth strategy. Based on the understanding of future labour market conditions and the human resource gap in the organisation, relevant HR strategies can be developed to bridge such gap effectively.
Succession planning is an important component of HR planning and management. Succession planning acknowledges that staff will not be with an organisation permanently and it is intended to provide a plan and process for addressing the changes that will occur when they leaves (Sharma, 2009). Although there is no single model of succession planning which can fit with all organisations and situations, there are three models which have been widely used in practice, including Seven-Pointed Star model, Leadership Pipeline model, and Acceleration Pool model. For the Seven-Pointed Star model, there are seven steps involved in the succession planning. Firstly, the systematic succession planning should be established as a programme. Then, the present work requirements in key positions should be assessed. After that, individuals’ performances in their positions will be evaluated and the available human assets will be identified. In the fourth step, future work requirements and competencies will be identified. Then, the individual employee’s future potential will be assessed. In the sixth step, a programme for leadership development should be established to develop future leaders internally. Finally, a continuous evaluation process will be applied to evaluate whether the succession planning model is working well (Kim, 2006). This model involves a series of individual process while the implementation of each process would influence the effectiveness of the whole succession planning programme. As a result, in order for such a model to be successful, a significant amount of resources and commitment are needed to support the programme.
The Acceleration Pool model focuses on the development of a group of high-potential candidates for key positions in general rather than carefully selecting one or two candidates (Kim, 2006). Such a model suggests that a mix of HR practices, such as mentoring, coaching, and training, should be used to facilitate the learning of candidates and accelerate their development (Kim, 2006). The key emphasis of the Acceleration Pool model is to develop the potential candidates for key position internally through providing abundant learning opportunities. The Leadership Pipeline model, on the other hand, solely focuses on the leadership development of human resources at different levels of an organisation. This model suggests that if the organisation has difficulties in finding qualified candidates at the top level of the organisation, then they would have more difficulties in finding qualified candidates at the lower level of the organisation (Kim, 2006). This model suggests a five-step plan for succession planning. Firstly, the organisation should modify the Leadership Pipeline model to fit its organisational context. Secondly, the standards of performance and potential should be translated into its own language. Thirdly, the translated standards should be documented and communicated within the organisation. Fourthly, the performance and potential of the candidates should be evaluated. Finally, the progress of the whole model should be monitored continuously (Kim, 2006). The Leadership Pipeline model is different from the Seven-Pointed Star model in several ways. More specifically, the two models have different emphasises and the Leadership Pipeline model requires organisations to modify the programme at the first place while the Seven-Pointed Star model does not have such a feature.
4.1 PEST Analysis for Sainsbury
- Increase in VAT
- Restricting Immigration
- Economic recession
- High unemployment rate in UK
- High labour cost
- Ageing Population
- Increasing trend for organisation to introduce innovative technology
Table 1 illustrates the key factors in the external business environment of Sainsbury which would affect its business strategy as well as its human resource strategy. In terms of the political factors, the VAT rate in UK has been raised to 20% this year which narrow the profit margin of Sainsbury as well as its competitors in the industry (BBC News, 2010b). Moreover, the UK government has decreased the number of non-EU migrant workers in UK by 5% in 2011 (BBC News, 2010a). This implies that the future labour market in UK will be comprised of British workers mainly and the restriction of the non-EU workers coming to UK might result in a certain skill shortage in the labour market. In terms of economic factors, the current economic recession would make Sainsbury very careful in determining how much resources should be committed to the development of human resources. Meantime, the unemployment rate in UK has increased to 8.3% this year (BBC News, 2011). This implies that the size of the future labour market will be huge. Moreover, the labour cost in UK is relatively high which put challenges to Sainsbury in selecting the right candidate from a large group of candidates. Another socio-culture factor which would influence the future labour market is the ageing population in UK. It is suggested that the pace of labour force ageing in UK is accelerating (National Statistics, 2003). This challenge would force Sainsbury to adjust the structure of its existing workforce in order to remain competitive in the market. In terms of technological factors, more and more innovative technologies have been introduced to the workplace in order to improve the operational efficiency and increase the organisational performance. For example, Sainsbury has introduced a significant number of self-check machines to replace a certain proportion of staffs at check out (Sainsbury Annual Report, 2011). This increasing popularity of using advanced technology in the workplace implies that the number of low-skill labours in the future labour market is likely to increase.
4.2 Human Resource Gap in Sainsbury
The strategic vision of Sainsbury is to continually achieve growth by further diversifying its business portfolios. For example, it has re-launched Sainsbury Energy this year and its banking business has been growing very well (Sainsbury Annual Report, 2011). As a result, it is suggested that those people who have knowledge and experience in particular business areas would be required by Sainsbury in order for it to achieve further growth. This is because Sainsbury just extended its business portfolios during past few years so its workforce in these business areas is less competitive compared with those of Tesco which has a much wider range of business portfolios. In addition, the increased VAT as well as the economic recession has negatively affected Sainsbury’s profitability. According, Sainsbury needs to recruit more leaders to add value to different aspects of the business. For example, it needs leaders to negotiate down the price with suppliers, to improve the effectiveness of marketing and sales, to lead the teams effectively and improve customer experience, and to develop competitive advantage for the company.
4.3 Arguments for and Against Investment in Human Resource Initiative
During the recession, there are three different perspectives towards the investment in human resource initiative. The first perspective suggests that organisations should not invest in human resource during the recession. Rather, the human resources process should be outsourced in the market to minimise the costs. The second perspective suggests that organisations should only invest in those HR practices and processes which can make employees more committed in the workplace (Roche, Teague, Coughlan, and Fahy, 2011). The third perspective suggests that there appears to be an underlying skills shortage for many organisations even in deep recession so it is necessary for organisations to invest in human resources initiative (Bircham, 2010). The first perspective is too simple which adopts a very narrow view in considering the function of human resources. Such a perspective only sees the cost incurred by human resource activities and it fails to consider the benefits might be generated by the human resource activities. The second perspective only focus on acquiring the commitment of existing employees and it fails to consider the benefits brought by other human resource activities. The third perspective is believed to be appropriate in Sainsbury’s case. For example, Sainsbury’s performance is satisfying in the current economic recession but it is still facing skill shortages in some business areas which provide evidences to support the third perspective.
Since the future labour market is considered as large in size and predicted to be comprised of a large proportion of low skilled labour, it might be challenging for Sainsbury to find the right candidate in the market. As a result, the company might consider developing its internal human resources. The Leadership Pipeline model of succession planning can allow Sainsbury to modify the programme according to the available resources and effectively exploit the potential of its existing workforce. As a result, it is recommended that Sainsbury could consider investing in such a model to develop the human resources it needed.
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