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ANALYZING/INVESTIGATING/SCANNING BUSINESS ENVIRONMENT

I. i. ii. iii. iv. v. vi.

Labour market Labour availability Age composition Gender composition Skills/knowledge/attitudes availability Bench marking Geographical differences

II. i. ii. iii. iv. v. vi. vii. viii. ix. x.

External environment Economic forces Technological forces Legal/political force Social/cultural/demographic force Competition Suppliers Trade associations Cartels/pools Shareholder/directors Consumers/consumer agencies/organizations

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Labour market - four major issues face employers in relation to the external labour market. i. ii. iii. iv. v. vi. Labour availability Age composition Gender composition Skills/knowledge/attitudes availability Bench marking Geographical differences

i.

Labour availability - managers attempts at predicting labour availability from within an organization by looking at current manpower levels, historical patterns of natural wastage [retirements, resignations, sackings, poor health etc] and comparing these with required manpower for a given future period, gap, between the two represent the required manpower to be met through recruitment, retentions, sackings and/or redundancies. It also takes into account required skills/competencies when planning fro manpower demands. At organizational level, labour availability externally can impact on internal availability, may indicate potential surplus or shortage problems. Many organizations may find it difficult to fill up vacancies for which there are no qualified staff available in the labour market.

ii.

Age composition - large proportion of current population comprise the youth those 35 years of age and below i.e. there are many young people entering into the labour market, hence employers who rely on young people for certain jobs find it very cheap and easy to get them. They also think of employment entry age, training, promotion and the reward policies that suit the youth. Analyzing age break down become HR managers as behavior/attitudes tend to change with age. It enables HR profession[s] to know about the composition and needs of work force, it also provides, useful information for recruitment, selection, training and reward management.

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iii.

Gender composition - it affects willingness of people to work. Most women these days enter workforce meaning most employers must establish and provide welfare facilities pertaining to women fundamental rights e.g. flexible working hours, maternity leaves, child care centers and medical allowances. Women are more reliable and permanents, hence they should be offered equal opportunities with men.

iv.

Bench marking - better practices of employment from other firms in the same industry are borrowed and applied for the purposes of improving performance efficiency. It involves simple comparison, learning tool of how things are done elsewhere, best practice applied improvement. Types of bench marking - functional, comparative performance among firms in the same industry in terms of inputs, activities and outputs. Process - comparing set of activities designed to produce specified output. Internally - comparing jobs, units, sectors, divisions, plants or subsidiaries/departments. Externally - matching firms in the same industry.

v.

Skills/knowledge/attitudes availability - before any job is created, through job analysis must be made to find out the skills/knowledge and attitudes it requires. Higher education provides highly skilled/knowledge professionals but it gets influenced by economic and social factors e.g. fees for higher education, culture, poverty, religion. In scarce skills/ knowledge areas, employers sponsor university/college graduates to carry out research to encourage potential school leavers to follow that career path.

vi.

Geographical differences - labour availability, gender composition and skills/knowledge attitude levels differ widely in different locations. In some, qualified, people weigh the available jobs in the market, in some areas, there are serious shortages. Employers must use a variety of methods for attracting and retaining qualified, manpower from any where. Some firms, therefore, move from areas with scarce labour supply to areas with surplus supply of labour.

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External environment - events happening outside a business firm but affecting its structure and operations, it is complex and multifaceted with many factors/elements with major impacts on business success or failure.

i.

Economic forces/economy - they determine the general level of business activities i.e. set the tone or determine the attitudes of all who participate in the conduct of business activities/operations e.g. when the economy grows, there arises great demands for consumer products/services and supplying organizations employ more staff and vice versa. Economic forces regulate the exchange of resources which have employment impacts. In inflation, employees demand higher salaries/wages to absorb decease in the purchasing power of money or they may demand to work for more hours as part time/overtime, hence, employers find labour expensive and avoid employing more staff or reduce those already employed. Gross national product represents a total measure of all goods/service produced in a country for a period of time, it gives a broad measure of all goods/service produced in a country for a period of time, it gives a broad measure of overall economic performance. Inflation reduces the demands for various goods/services thereby reducing available employment opportunities. Real disposal income measure the amount of money that citizen have to purchase goods and services after taxes. If it is scarce/limited, it encourages people to work but if it is plentiful, it discourages people from working hard. What happens in the global economy can have impact on employment and human resources management e.g. contracting international economy results in fewer goods being sold bringing in down turn in profits among countries.

ii.

Changing nature of international trade - has resulted in contraction of some industries e.g. heavy machinery which reduces employment opportunities. Adopting cost minimization/effectiveness reduces employment of labour by using more machines and materials which are cheaper. Current move from traditional full-time employment status towards the small core of employees supplemented by flexible short term workers/part-time employees, affects relationship between employers and employee.

iii.

Technological/forces/technology - improvement in the efficiency of machines, materials, tools, equipment, method, producers and rules. As technology improves, it reduces employment opportunities as many employers opt to mechanize their work processes by using advanced materials, machines, tools, equipment etc at the expense of labour.

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Technology-art and science of the production and distribution of goods and services; technological advances get in the products themselves and also in the processes used to design make and distribute the product or service itself. It affects design of jobs in an organization and also has an impact on the demand for products and services made/rendered. iv. Legal and political forces - legal environment has had greater impacts on human resource management fro the last sixty years i.e. very many legislation covering virtually every aspect of employment from hiring to firing have been passed. Legal environment provides a complex web of rules that very much constraints and specifies what can be done legally in human resources management e.g. child labour, sexual harassment, disability, workmen compensation, redundancy/layoffs; because of the complexity of the law and the frequency of changing interpretations due to court cases and administrative rules making, wise managers rely on the advise from an advocate when questions arises. Political involvement in employment has continued over very many years by the government promising through election campaigns better employment legislation, pay equity, occupational health and safety, industrial relations, pension schemes, recruitment, selection, training and rewards; government also intervenes in the economy through budget provisions on financial policies enforced by central banks. Political trends are closely related to socio-cultural demographic trends i.e. politics is shaped by the character and mood of the people of the society. v. Socio-cultural and demographic forces - socio-cultural and demographic forces - that make up a society i.e. values, norms, institutions, age, gender, religion, tribe, life styles etc. they relate to the ways people think, react, relate to one another, live their lives. Such cultural factors influence business through providing customers and labour force e.g. increased women labour force has forced employers to think of an emphasize women affairs-maternity leave, child care centers, reduced overnight at night or travelling. vi. Competition - strategies and practices of rival firms/ competitors in the same industry have a major direct impact on HR strategies formulation, adjustment and adoption; if a company discovers that competitors pay higher wages/salaries for similar jobs, it must decide to match or exceed those wages/salaries to attract and retain a competitive productive workforce; competitive strategy can set the overall level of business for particular firm i.e. competitive factors have always been a major force in strategy formulation, adjustment and implementation.

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vii.

Market forces [customers/clients] - market and industry characteristics guide much of the corporate strategies closely connected with competition since competitive forces, forces, interplay within specific markets. Good managers must access their markets; customers, market segmentations, market characteristics and revolution/changes, strategies to be adopted for success and wages/salaries for staff. Other stakeholders - [suppliers, government controlling agencies, customers, consumers organizations, cartels/pools and shareholders/directors]. Student assignment.

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International forces - factors affecting HRM functions internationally/globally i.e. their influences go beyond national borders of most countries.

i.

Education, training and development - countries frame and implement education system geared towards meeting the needs of their national economic, industrialized, social development programmes. Any person moving from one system to another must drop requirements of the system he is moving away from and adopt requirements of the system he is joining in order to become employable e.g. Kenya legal administration [KSL], CPA and ACCA, certification by higher commission of education.

ii.

International labour laws [ILO] - member countries of UNO attend ILO conferences where they pass resolutions/conventions which they undertake to implement in their own countries. Some countries insist on immigrants getting work permits before they can be allowed to be employed locally.

iii.

Technology - technologically advanced countries to give aids/grants to those countries which are still backward; they give required trained manpower and the necessary machinery, tools, equipments and impose selected areas of investments which affect employment in the countries concerned.

iv.

International culture exchanges [e.g. US peace corps] - some countries insists on their trained manpower going to other countries to serve the community to understand normal human problems before getting employed formally; this can make them become aware of employment problems outside their country.

v.

Trading blocs [PTA, COMESA, EAC, BU etc] - most countries forming trading agreements also allow free movement of capital labour technology, education, culture etc to move through their national boarders thereby creating more employment opportunities.

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Fiscal/financial policies/foreign investments - any govern lay down areas of investment in the local economy they would allow both local and foreign investors to undertake; those countries with excessive trained idle manpower recommend investments in labour intensive industry/factories/firms e.g. Kenya in agricultural sector; the government also lay down policy governing taxation which can affect investment and employment and vice versa.

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Market availability/non-availability. Availability of natural resources. Infrastructure [to be done by students as an assignment]. Internal analysis focuses [internal audit/personnel research] - one way through which organizations asses/evaluate/human resources effectiveness and efficiency to meet the ever changing/increasing demands for high productivity in todays competitive market place. It involve evaluating HR department effectiveness in serving the organizations human resources needs. It enables the organization analyze its human resources policies, functions and practices to determine weather changes or any improvements are necessary in such functions as recruitment, T & D, salaries, wages administration, safety and healthy measures, separation, discipline, performance appraisal etc. For HR audit to be effective the firm, must find out what it seeks to achieve by is operations; it implies who is to perform the audit and the most suitable way to be used in conducting it. It involves the following internal analyse:

i.

Business process/functions - laying down procedures of doing every work; observing, measuring and recording the actual work

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