HR Objectives (AQA A-Level Business): Revision Notes
Internal and External Influences
Understanding influences on HR objectives
HR objectives don't exist in isolation. Like all business decisions, HR planning is shaped by various influences from both inside and outside the organisation. These influences determine what HR objectives a business sets and how it tries to achieve them.
Businesses must consider these factors when deciding on workforce planning, recruitment strategies, training programmes, and how to manage their employees effectively.
External influences on HR objectives
External influences are factors outside the business's direct control that affect HR decision-making. Understanding these helps businesses anticipate changes and adapt their workforce planning accordingly.
Economy
Economic conditions have a significant impact on a business's demand for staff. When the economy is growing and expanding, businesses typically experience higher demand for their products or services. This increased demand often means they need to recruit more employees to meet customer needs.
The state of the economy also affects demographics (the characteristics of the population) and labour availability (how many workers with the right skills are available). For example, during economic growth, skilled workers may become scarce as more businesses compete to hire them. This can push up wages and make recruitment more challenging.
Exam tip: When discussing economic influences, always link them to specific HR decisions like recruitment, training, or wage levels.
Political
Government legislation and EU regulations create a framework within which all businesses must operate when managing their workforce. These laws directly influence HR objectives and practices.
Key examples include:
- Equality legislation – laws requiring fair treatment regardless of gender, race, age, disability, or other protected characteristics
- Minimum wage laws – setting the lowest hourly rate businesses can legally pay
- Working time regulations – limiting working hours and mandating rest breaks
- Health and safety requirements – ensuring safe working conditions
Businesses must ensure their HR objectives align with these legal requirements. For instance, diversity objectives often stem from equality legislation, while wage structures must comply with minimum wage laws.
Technology
Technological advancement has fundamentally changed HR requirements in many industries. The introduction of automation and new technology in manufacturing has reduced the need for manual labour. Machines and computer systems can now perform tasks that previously required human workers.
However, technology also creates demand for new skills. Employees need training to operate modern equipment and software. The shift from a manufacturing-based economy to a service sector economy has changed the nature of work itself. More jobs now involve customer service, knowledge work, and digital skills rather than physical production.
From an HR perspective, businesses must focus on developing the skills their workforce needs for a technology-driven workplace. This includes both technical skills (using specific software or equipment) and broader capabilities like digital literacy and adaptability.
Example: Technology's Impact on Retail
A retail business introducing self-service checkouts needs fewer checkout staff but requires employees who can maintain the technology and help customers use it. The focus shifts from simple transaction processing to technical support and customer assistance.
Competitive environment
Changes in the market and actions taken by competitors affect customer demand for a business's products or services. When demand changes, so does the need for human resources.
If competitors launch new products or reduce prices, a business may experience falling demand. This could lead to a need for fewer staff or a shift in the skills required. Conversely, if a business successfully competes and grows its market share, it will need to expand its workforce.
The competitive environment also influences what skills employees need. If competitors are innovating rapidly, businesses need staff who are creative and adaptable. If price competition is intense, businesses may focus on efficiency and productivity.
Internal influences on HR objectives
Internal influences come from within the business itself. These factors are more within the organisation's control but still constrain and shape HR decision-making.
Corporate objectives
Corporate objectives are the overall goals the business wants to achieve. HR objectives must be aligned with these corporate goals – they need to support and enable the business to achieve what it wants to accomplish.
If a business has an overall objective of growth, its HR objectives need to prepare for this expansion. This means ensuring the availability of enough workers with the right skills to support increased production or service delivery. HR may need to focus on recruitment, training existing staff to take on more responsibility, or developing future leaders.
If the corporate objective is to reduce costs, HR objectives might focus on improving productivity (achieving more output with the same number of staff) or reducing labour turnover (to save on recruitment and training costs).
Key Point: Alignment is Critical
HR objectives should never contradict corporate objectives – they must work together to support business success. Misalignment between HR and corporate goals can undermine the entire business strategy.
Type of product or service
The nature of what the business produces or provides determines what kind of workforce it needs. A business must ensure its employees have skills appropriate to its particular product or service offering.
Additionally, the workforce must match the image and values the business wants to project. A luxury hotel, for example, needs staff with excellent customer service skills who can create a premium experience. A high-tech software company needs employees with advanced technical knowledge and creativity.
Different products and services require different skill sets:
- Manufacturing requires technical and operational skills
- Professional services require specialist knowledge and qualifications
- Retail requires customer service and sales abilities
- Creative industries require innovation and design skills
Style of management
How managers choose to view and treat employees has a profound impact on HR objectives and practices. There are two contrasting approaches to human resource management:
Two Approaches to Human Resource Management
Hard human resource approach treats employees as just another resource or asset that must be used as efficiently as possible. Under this approach, the focus is on minimising costs and maximising output from staff. Employees are seen similarly to raw materials or equipment – something to be managed for maximum efficiency.
Soft human resource approach treats employees as a valuable asset that needs to be developed and nurtured. This approach sees employees as the source of competitive advantage. By investing in staff development, engagement, and wellbeing, businesses believe they can achieve better long-term performance.
The management style a business adopts influences many HR decisions:
- Hard approach leads to objectives focused on cost control, basic training, and short-term hiring
- Soft approach leads to objectives focused on employee development, engagement, retention, and long-term investment in people
Example: Contrasting Management Approaches
A business using a hard approach might hire temporary staff to save costs and provide only essential training.
A business using a soft approach might invest in extensive training programmes and career development for permanent employees, viewing this as a long-term competitive advantage.
Exam tip: Be prepared to evaluate which approach is more appropriate for different business situations. Neither is always "better" – it depends on context, industry, and business objectives.
Remember!
Key Points to Remember:
- External influences (economy, political, technology, competitive environment) are outside the business's control but must be responded to when setting HR objectives
- Internal influences (corporate objectives, type of product/service, management style) come from within the business and are more controllable
- Economic growth typically increases demand for staff, while recession may reduce staffing needs
- Government legislation sets legal requirements that HR objectives must comply with (equality, minimum wage, etc.)
- Technology reduces some job roles but creates demand for new skills
- HR objectives must align with corporate objectives – if the business wants to grow, HR must ensure skilled staff are available
- The hard approach views employees as resources to use efficiently; the soft approach views them as valuable assets to develop