The aim is to investigate about the HR issues that require addressing and incorporating into the general development strategy of Paul Jones Ltd. SWOT Analysis has helped to understand the strengths, issues, weaknesses and helped in categorizing it into internal and external factors that the organization ought to consider. The parts of HRM issues and difficulties that we will research are further scattered into internal and external factor which includes Level of Expansion and Growth, Economic factors, Extrinsic Reward system, Trade Union, Cultural factor and the demand for professionals in the host country.
HRM will confront various opportunities and difficulties in the upcoming years. How well they adapt in an expanding worldwide market will affect how well their organization does in the marketplace. HR professionals should manage such different issues as building talent pool, overseeing diversity projects and managing trade union issues. The capacity to adapt information quickly will be required by the future human resource managers. To add to the multifaceted nature of those issues is the fact that many factors are inter-related and influence distinctive parts of operational and human resource management.
SWOT analysis is a framework for assessing a firm’s resources and capabilities (strengths and weaknesses) and external market situation (opportunities and threats). SWOT Analysis gives the opportunity to question stakeholders about the future outlook for the industry and, in particular, about potential threats and opportunities. The preceding analysis has been static; focusing as it does on the current state of Paul Jones Ltd. It is also worthwhile to reflect on how the current state of the industry may shape future outcomes, and hence, how the company’s significant contribution to the economy could grow or decline in the future.
Internal factors that affect the HRM Practices are related to the events and changes taking place within the organisation. This can include changes of ownership, changes in the internal management structure, mergers, acquisitions and significant downsizing or hiring trends. The internal environment of organizations strongly affects their HR practices. According to Zheng and Morrison (2009) study show that various HRM practices at small and medium enterprises are influenced by organizational contextual variables including ownership, age and size of firms. Milkovich and Boudreau (1991) pointed out that, researchers have compiled a list of organizational characteristics which are related to HR practices.
When it comes to human resource management there are several factors that affect day-to-day operations. Adapting in this field is important because at a moment’s notice new legislation can be passed with an immediate effective date or corporate policies are changed where human resources feels the brunt. A well-developed strategy for your human resources department takes into consideration external factors that might affect your department.
Perhaps the main function of human resources departments is to maintain adequate staffing levels through workforce planning. One external factor that influences the ability to recruit qualified candidates is the labor market availability, which is affected by unemployment rates, number of qualified workers in the reasonable commuting distance and, in some cases, the availability of applicants with specialized skills. An organization might have difficulty identifying and attracting suitable candidates, especially if the same skill sets are in demand throughout the industry.
The company’s geographic location may also be a factor if the labor pool is not large enough in the immediate area. Then, HR managers may need to focus their recruiting efforts outside the region and pay relocation packages as appropriate to encourage qualified staff to take up a position.
Following are the strengths of Paul Jones Ltd.:
1.1.1 The Level of Expansion and Growth (Internal factor) – It is one of the most important internal factor. Paul Jones Ltd. gained reputation and expanded its business in major cities such in London, Milan, new York, Sydney and Tokyo. There has also been a proposal to expand the business in Nordic and Baltics regions but however, there has been a nervousness about this proposed expansion plans. An internal factor that impacts human resources is the company’s rate of current and projected growth. There is always an extensive research behind expanding and also gaining success after such a massive expansion, but attaining success is not always the case. Companies who want to experience aggressive growth and rapid expansion may require its human resource department to focus on recruitment and staffing. Downsizing companies may have to take the regrettable decision to lose some of its staff; a message that’s often left for HR to relay.
Further, analyzing the success in Helsinki, the company was encouraged to open new outlets in places like Latvia, Riga followed by Estonia and Lithuania. These places are known for having immense fashion awareness so choosing these places to grow their profits shows their strength of understanding market. This strength of Paul Jones Ltd. Is also an opportunity to develop into a much bigger market. Using the strength the company can gain new opportunities and fulfil its objectives.
1.1.2 Economic factor (External factor)- Another strength of Paul Jones Ltd. is seen through its fluctuating financial statistics and their ability to handle it effectively. There were several economic factors that affected the organization but they still continued to make healthy profits. This success is due to niche of exclusivity and because company continuously looks for development opportunities. Even though having a control over the profit and loss proves to be an achievement but this trait can also be a threat to the organization. As they keep an eye on newer development opportunities, they should also have focus on the aspects that are resulting in a drop of their profit margins. The reason for losses are then to be diminished so that the organization can be free of any threats.
Economic forces include growth rate and strategy, industrial production, national and per capita incomes, money and capital markets, competitions, industrial labour and globalization. All these forces have significant influence on wage and salary levels. Growing unemployment and reservation in employment also affect the choice for recruitment and selection of employees in organizations. One of the biggest external influences is the shape of the current economy. Satow & Wang (1994) found that due to development in global economy, the international dimension of HR practices has become more and more significant. The economic crises in 2001 resulted in decrease of demand, and so manufacturing and employment. Besides, many firms cut the wages and salaries of their employees. HR practices focus has shifted from traditional topics to wide concepts such as globalization and international competition.
1.1.3 Extrinsic Reward system (Internal Factor)- Extrinsic rewards are the physical rewards that comes from an external source (employers). A properly designed extrinsic reward can also be emotionally attached with the employees as employees value such rewards. An extrinsic reward is also directly related to the job performance of the employees but it is not necessary that employees receive a reward every time they accomplish a task. It depends upon the policy of the company. There are various ways a company can choose to reward its employees. Reward system includes the total reward, total remuneration, base or basic pay. This is successful in creating a work experience meeting the employees’ needs and encourages them to give their best for the organization. On the basis of analysis, it was noticed out that it can make a greater impact on the company’s sales, effectiveness and talent management. The HR department must first decide what types of benefits to offer employees, including medical insurance, dental insurance, vision insurance, vacation and personal days and more, while keeping cost and budgets in mind. After deciding what types of benefits the company will offer, the HR department must choose to manage them in-house or outsource them to external benefits companies.
Many companies are struggling with how best to structure reward system. Small businesses must compete not only with businesses of a similar size, but also with corporations with big payroll budgets. Plus, you must factor in the cost of benefits, training, taxes, and other expenses, which can range from 1.5 to 3 times the employee’s salary. Creating a system to reward employees for excellent performance is one way to make up for a lower salary. In addition, consider offering incentive programs such as profit sharing or bonuses, which can be a win-win for the employee and the company.
Matching the reward system with the level of performance for each job assigned in organization is known as reward management. To make effective reward management, an organization has to prepare an appropriate reward system. Attractive and transparent reward system must have quality to motivate and empower the dedicated and reliable employees. They feel proud to be associated with the organization. Reward can be considered as a benefit, facility and career development. Reward managements should match with the job performance level, employee’s requirement and overall organizational capacity. Reward management will also assist in planning the long term financial management.
Similarly, Paul Jones Ltd. gives out 50% staff discount to their employees which is a big advantage for them and hence very appreciated but it is eligible only after 6 months of service in the organization. There is limited concern regarding trade union involvement and hence employees can work for longer hours apart from the operations in France. The issues regarding French legislation is explained further in the Trade union.
Reward system provides an opportunity from the employee as well as employers perspective. Employers can benefit in terms of increased retention of employees i.e. due to such attractive reward systems no employee feels like leaving the organization and also newer candidates are attracted to join the organization. Even though it is one of the important elements, it isn’t always the most important factor for employees and job candidates to be encouraged on the basis of extrinsic rewards, some need intrinsic rewards to be genuinely motivated such as compliments, recognition and work autonomy. Hence, gaining harmonisation of terms and conditions across the global operations of Paul Jones Ltd. is a bit difficult.
Following are the weaknesses of Paul Jones Ltd.:
1.1.4 Trade Union/ Labour Laws (External)- There are few laws implemented in the labour market on the government level. There are obligations which are influencing the industry. For instance, we see some reserved seats for a specific gender, age group, location of the people. The circumstances and employment conditions around the location of the organization also matters. Trade unions are formed to safeguard the interest of its members/workers. HR activities like recruitment, selection, training, compensation, industrial relations and separations are carried out in consultation with trade union leaders. Union activities also affect the HR practices within the organisation. They influence HR practices directly. Kochan et. al. (1984) suggest that the presence of union in the organisation is associated with HR practices. No matter how large or small your business, it’s important to make sure you’re in compliance with local, state, and federal labor laws. There are regulations on everything from hiring practices, to wage payment, to workplace safety.
Similarly, two years ago Paul Jones Ltd. faced an issue with union law in Paris when they opened a store in Paris, French labour legislation caused a havoc regarding the employment of part time and temporary employees. Though the business in Paris outweighed the HR issues and concerns, it still matters how large or small your business is, it’s important to make sure you’re in compliance with local, state, and federal labour laws. There are regulations on everything from hiring practices, to wage payment, to workplace safety. The issues was with effect from 1 January 2016, the minimum working hours applied to all contracts (i.e. including those already entered into). However, employees working less than 24 hours since 1 January 2014 could request an increase in their hours. The employer can only legitimately refuse such request if it can show that the refusal is justified by economic reasons.
1.1.5 Impact of cross cultural issues on business and management (External): Culture is an acquired knowledge that shapes values, originates attitudes and affects behaviour, and which members of a society (or a social group) use to interpret experience and generate social behaviour. (Luthans and Doh, 2009). Managing global workforces has increased pressure on Human Resource managers to recognize and adapt to cultural differences, which when ignored can result in cross-cultural misunderstandings.
Culture can be analysed from a country, language, religion, values, ethical and many other areas of study as a frame of reference. Cross culture can be experienced by an employee who is transferred to a location in another country. The employee must learn the language and culture of those around him, and vice-versa. This can be more difficult if this person is acting in a managerial capacity; someone in this position who cannot effectively communicate with or understand their employees’ actions can lose their credibility. In an ever-expanding global economy, cross culture and adaptability will continue to be important factors in the business world.
Paul Jones Ltd. had a cultural issue regarding communication. Exceptional customer service is a critical requirement at Paul Jones. It is mainly a problem in the expanding new markets. HR managers struggle to understand the local culture and hence impacts on issues such as management styles and employee behaviours. It has been a concern for the head offices as countries are given a large degree of autonomy unless provided they meet required sales and profit targets. The requirement is that of providing the best possible customer service, which is expected from the employees that are in direct contact with the customers. According to Head Office Management Team, having a smooth communication in the new market is quite difficult that is because with the new market and new environment, the employees need to take some time to understand the culture and the language which can act as a barrier to the communication. Challenges may vary to the ones the employees must have faced in their earlier job experiences, hence resulting into reduced customer satisfaction. To help with such issues the company can setup an extensive training program which teaches employees the language which they need to communicate with the customers. Also, Paul Jones Ltd. has decided to recruit regional Directors and HR Managers within the host country which can easily understand the language and culture and simultaneously help employees to learn while they work.
Interaction and communication across international borders have turned out to be necessary for many workers around the world. Consequently HR is under strong pressure to find employees who are not only technically proficient but also culturally perceptive with the ability to be successful in a global work environment. Employees with crucial intercultural skills like the ability to understand different cultural contexts and viewpoints, demonstrating crucial intercultural skills like the ability to understand different cultural contexts and viewpoints, demonstrating respect for others Knowledge of a foreign language brings benefits to the organizations through their ability to bring in new clients, work within diverse teams and also support for the growth of the organization.
Human resource management is thought of, understood as, carried out, and measured and judged in different and distinct ways in different countries. The differences exist because people are trying to do different things to achieve different objectives in different circumstances (Brewster and Mayrhofer, 2012). And the reason that they have different HRM policies and practices may lie in either cultural differences between societies or in institutional difference between them. Culture is the collective programming of the mind that differentiates members of one social group from another (Hofstede, 1993). Kostova and Roth (2002) suggest that it is not the national culture but rather the institutional environment that is ‘responsible’ for differences in organisational behaviours in different national markets. In the recent years, with the increase in globalization and diversity in the workplace, cross cultural management has become an important element of every organization.
Hofstede’s (1980, 2001) research in relation to national cultures has also been highly influential. Basing his ideas on research carried out between 1967 and 1973, Hofstede created a new paradigm for the study of obdurate culture, which was a four dimensional model of national culture, later expanded and developed to incorporate another dimension. He argued that many differences in work-related values, beliefs, norms and self-descriptions, as well as many societal variables, would be better understood if we linked them statistically with a series of underlying dimensions of culture.
Following are the six dimensions of national culture are based on extensive research done by Professor Geert Hofstede, Gert Jan Hofstede, Michael Minkov and their research teams.
Figure 1: Hofstede (1984) 6 cultural dimension theory
- Power Distance: It is the extent to which organizations and societies believe that power should be distributed equally or unequally. In work terms this relates to the centralization of authority within an organization, and the extent to which leadership is autocratic. Societies with ‘high power distance’ are hierarchical organizations in which it is accepted that the more senior employees have more power. Countries with a high power distance include the Philippines, Singapore, France and Greece. Countries with a low power distance have flatter organization structures and a less autocratic style of management, examples being the UK, Sweden and New Zealand. In a culture where there is a high power distance employees must realize that the hierarchical structure in the organization should be respected. In such countries it would be inappropriate to expect a more junior employee to make an important decision without deference to more senior management.
- Uncertainty Avoidance: Uncertainty avoidance is the extent to which organizations and societies feel uncomfortable with ambiguous situations, and the extent to which they will try to avoid uncertain situations. France is an example of a country with a high uncertainty avoidance, and in this country there is a strong bureaucratic structure which helps to avoid risk taking. Countries such as the UK, Sweden and Norway have low uncertainty avoidance and have more flexible structures and accept more diverse views. In a culture where there is high uncertainty avoidance employees must accept that there is likely to be a certain amount of bureaucracy associated with business activities. Trying to avoid this bureaucracy is likely to be impossible, and also likely to cause difficulties with local employees.
- Individualism vs. collectivism: Individualism is the extent to which people operate as part of a group, or on an individual basis. In the USA, for example, individualism is high and people look after themselves. This is also increasing in the UK, with individuals moving towards personal employment contracts and individually negotiated reward packages. In countries with low individualism, such as Japan, being part of a group is considered as strong and promotes loyalty to that group. In a culture where there is low individualism (a collectivist society) there is considerable focus on operating as part of a group. Employees working in such countries on an international placement need to understand that they must fit in as part of a group, and not try to encourage individuals to operate separately to the group to which they belong.
- Masculinity-femininity: It is the social or emotional implications of having been born as a boy or a girl in an organization context. This refers to the extent to which the dominant values in a society are what Hofstede described as ‘male’- assertiveness, acquisition of money and goods and not caring for others. In more ‘masculine’ societies, like Japan, Austria, Mexico, and Italy the gender roles are more rigidly defined than in more ‘feminine’ societies like Scandinavian countries, with their greater emphasis on work-life balance.
- Long term (work) orientation versus short term (leisure) orientation: In Low score they prefer to maintain time-honoured traditions and norms while viewing societal change with suspicion. In High score they take a more pragmatic approach i.e. they encourage thrift and efforts in modern education as a way to prepare for the future. Leisure seeking behaviour is generally less productive.
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