External and Internal Influences that affect Human Resource Planning
Many large and medium sized businesses today have a personnel department. Its main role will be to manage the firm’s human resources. These are the employees or personnel in a business that help it to achieve its objectives. They might include production workers, office staff, members of the marketing team, accountants or cleaners.
Human Resource Planning is the method by which a business forecasts how many and what type of employees it needs at present and in the future. It also involves matching up the right type of employees to the needs of the business. A business will work out its labour requirements, its demand, and make sure that an appropriate supply is demanded.
There are many external and internal influences that can affect the success of the human resource management team and it’s planning for the short and long term. The difference between these influences from the point of view of Human Resource Planning (HRP) is that external is outside the immediate control of organisations, where as internal are more within control of organisations and can be more responsive to good HRP.
The external factors can be simplified to the mnemonic PESTLE. These factors affect any leisure and recreation organisation. Each letter influences a business in different ways.
Political
Economic
Social
Technological
Legal
Environmental
Political
This is concerned with how political developments, regionally, nationally and internationally might affect a leisure and recreation businesses strategy and objectives. A change of government might affect a Leisure and Recreation provider such as our company ECC because they may introduce new policies or taxes that would mean our business may have to have to pay more direct tax and would consequently mean that our company would have less capital to spend on improving the business, or increasing employees wages.
Political Instability could also occur in the United Kingdom. This could cause unrest within a country and could reduce the amount of people visiting your organisation. Here at ECC we may be affected, as there is a possibility of war with Iraq, which would mean people wouldn’t visit the UK or the USA as the countries could be destructed by a war. That means we wouldn’t have a business, as we would not get any customers visiting our restaurants so we would end up bust.
Economic
This incorporates:
- Government Policy – Monetary Policy and Interest Rates
- Economic Variables - Inflation and Unemployment Levels.
The Monetary Policy is used to manage the level of demand in the economy with a particular emphasis on controlling the money supply. Monetary Policy can be used to:
- Expand the economy by allowing more money to circulate and increase spending.
- Control spending and restricts increases in money flowing around the economy which may lead to price rises.
The government has used a variety of methods in the past to control the money supply. One is by changing the Interest Rates. Interest Rates is the rate of which businesses and people have to pay back money on loans and on there credit cards. The Monetary Policy meet to determine how much money they want circulating in the UK economy so that it can affect the money supply and inflation.
An increase in Interest Rates can reduce the money supply. If interest rates increases, the rate of borrowing rises. That can affect leisure organisations such as ECC a great deal because if we want to expand and develop more restaurants in the UK then that would cost us more money to take out a loan, as the banks would charge us more interest. So then we may have to up our prices and pass on the increase of interest to our customers, which would then decrease the demand of our products, and may go to competitors such as McDonalds or Burger King.
The level of inflation is when prices are rising (the rate of inflation) this also has an effect on consumer spending tending to slow down due to the high prices. Due to the loss of demand it has a knock on effect upon suppliers, who pass the increased fixed costs to companies such as ECC. That means that we would have to pay more for all our raw materials such as our food and cooking and cleaning goods and then that means increased prices. Our Human Resource Management department would be effected as that means we wouldn’t be able to increase the wages of the employees like they may want, as we cant afford the rise in inflation, which could lead to de- motivation in our staff and the possibility of employees leaving.
Unemployment levels at a high level, generally means the UK population as a whole has less money to spend on leisure and recreation activities, and instead spend the money on essential goods. When employment levels are high the population feel confident and have more disposable income to spend on luxury goods or on leisure activities. That could influence our HRP in two ways. Either by having a lot of people spending a lot in our restaurant as they have more money, which means we could afford to give our employees pay rise. Which then would make our staff more motivated and then work more efficiently and produce a better service to customers. And the opposite effect being less demand from customers and then less profit, and we would have to reduce prices to increase demand. By doing that the staff would not get any more money and become more de- motivated.
Social
The factors include Consumer Trends, which are the trends of the UK population. If the economy is experiencing an upturn in demand that means a company such as ourselves that means we would have to employ more staff as the increase in demand needs more staff to cope with the queues and maintain our service standard of fast, quality food to our customers. So we would employ part time staff so they can be flexible and if the demand decreases then we could not use them or pay them as much.
Our HRP may need to be modified if there is a sudden demographic change to our customer base. There is an increase in the “grey market” in the United Kingdom these are the over 50’s so that means we may employ more over 50 staff to appeal to the “grey market” as they generally have higher disposable incomes and more free time to come to our restaurant. So that could be something for our HRP to decide on, so we can provide a service to a wider market and then increase our profits.
Technological
We should improve our technology in ECC by maybe having to introduce online booking at our restaurants to keep up with the ongoing advances in technology and make our company have an advantage over our competitors. It would need high levels of investment, and increasing amounts of customers means ECC would have to employ more staff and also have to pay more on training the staff to be suitably equipped to deal with the new technology which would then mean having to pay out more for the wages of the employees.
Legal
Legal factors could include new health and safety legislation, such as tighter fire precautions, which would mean that our employees would have to go away to an external environment to be trained correctly to make sure ECC cant be sued due to staff not being trained in health and safety.
Environmental
Here at ECC we make sure there are no reasons why we as a company aren’t being environmentally friendly and then we aren’t subject to pressure groups demonstrating against the business, which then would lead to a loss of profit, as demand would decrease because of protestors against us.
There are also internal factors that can affect businesses HRP.
Structure and Ownership can lead to good and bad HRP. ECC being a large hierarchical organisation has many staff on many levels need a carefully researched human resource plan, which we have to avoid poor communication between restaurants. We make sure each manager of each restaurant across the world takes into account there employees opinions to make our company better as they are the experts in their job. That is all to increase the profits of the business and make it more efficient.
The Size and Location can also affect a company and its HRP. We deliver one type of service, so all staff everywhere can be trained to the same standard across the organisation so we achieve the same results and provide the same great service. The location of the business can also be key, because if it is located in the countryside instead of the town centre where we locate our restaurants then we wouldn’t appeal to such a wide market and then not get as much profit, which would lead to less money being put towards our employees who are vital.
