External Factors that Shape the HR Agenda

Organizations have to respond to major external contexts facing them and try to shape their own HR agenda. Identify and discuss three external factors that help shape the HR agenda within your organization (or give examples of an organization you know).

Introduction

In this essay, I am going to discuss Samsung Group, which is headquatered in Seoul, South Korea. They are a multinational conglomerate and engaging in numerous fields  ranging from electronics, engineering to insurance or even medical.

The first factor I will discuss is economic, through the past twenty years, during the economic crisis, Samsung had to change their policies about recruiting people because the market environment at the time was challenging as Samsung had a lot of economic losses as shown in the report by Financial Times (2008).

At the time, there was a downfall for demand of electronics causing loss on profit and therefore the company could not invest in recruitment processes.

The next one in my essay is going to be about enviromental, the climate change affecting a lot of companies and Samsung is not the exception. One of Samsung’s corporate goal is creating “Climate Change Performance 2020 KPI”, this is likely to affect the training program of the company.

The last factor will be technology. The world witnessed a significant change in technology booming, Samsung is one of leaders in this field so their HR agenda is likely to change because they will have to adjust in order to commit to their goals.

Body

Let’s get the ball rolling by the definition. Both internal factors and external factors play a crucial role in shaping a human resource agenda in every organization. External factors are defined as outer contexts that influence the way Human resource departments make strategic plans and that organizations do not have control over these ones, there are various type of external factors like social, economic, legal, technological, etc.

In an academic style, these factors are collected and classified to synthesized. It is known as a common consecutive acronym letters, PESTLE.  PESTLE is known as a strategic system for business when they want to understand about what external factors affect their plan. PESTLE has six letters and stand for six different factors that any organization should put in consideration if they want to build a solid human resource agenda.  “Political, Economic, Social, Technological, Legal and Environmental”, it is used for many fields like marketing planning, strategic planning product development or in report researching for years.

“Developed in the early 2000s, this methodology is sufficiently robust and can be used by undergraduate students, graduate students, and seasoned practitioners doing a market analysis, diagnosis prior to implementing transitions, or benchmarking in anticipation of an intervention”

 (Mafalda Carmo, 2015)

By understanding these external factors, any businesses and companies can in one hand, increase the chances and in other hand, decrease the dangers to the organization.

The Harvard model is a model introduced by Beer et al (1984) at Harvard university. This model is useful in tracking how a change when HRM policy choices affect HRM outcomes (Brunetto et al, 2011). This model acknowledges the existence of multiple stakeholders inside the organization, include shareholders various groups of employees, government and the community at large. The Harvard model is premised on the belief that by treating the organization’s human resources as assets and not costs, it will give competitive advantage to the organization.

Matching model (Fombrun Tichy and Devanna, 1984) was the first model identified on HRM. This emphasize four functions (selection, appraisal, development and rewards.) and their interrelatedness. This model argues that within HRM there is a human resource cycle affecting individual and organizational performance

Back to the purpose of this essay, previously worked shows the Asian financial crisis of 1997 forced a number of business conglomerates to change the old Korean management style and also the HRM mode (Chang, 2012) despite of the fact that, the Korean government has supported those companies by a great number of policies in the form of low loan costs, financial assistance, tax reductions, import and export licenses (Lee, 2000). Since 1997, Samsung Electronics Co. is one Korean biggest enterprise has been changing when facing quickly business development and join with the global economy.

First, DiMaggio and Powell’s (1983) claim that most Korean unique business organization’s structure have been influenced by Japan’s family-dominated structure. This point seems reasonable because from 1910 to 1945, Korea was under Japanese rule. Indeed, in Samsung’s case, it goes exactly the same, Samsung Group was founded by Byung-Chull Lee in the 1930s. His son, Kun-Hee Lee, was Samsung Electronics Co. chairman till 2014. From 2014 until now, Kun-Hee Lee’son, Jae-Jong Lee take his position to become new chairman of Samsung Electronics Co., who already a vice-chairman of the business conglomerate before his father retirement.

Korean companies had to change their HRM strategies toward becoming real competitor and looking for more advantages (Park and Yu, 2012). Samsung, like other big Korean business structured economy, was known as an easy to break structure and then after being hit hard by the financial and currency crisis of 1997 and 1998, which left out 20 of its 65 subsidiaries. Also 256 businesses were liquidated and approximately 50,000 workers were dismissed. In the effort of reforming executive and employee obsession with quantitative growth and encourage creativity, Samsung let people come to work at 7:00 am and leave at 4:00 pm, which called 7.4 system. This system gave employees more free time to have individual development. Roughly 117,00 people inside and outside Korea have been employed in 2010. Approximately 66,000 employees inside the country. Within these employees, 27,000 are working in the R&D department, which represent 41% of residential employees, while the number of local employees outside Korea is 51,000.

Samsung Electronics Co. has a challenging aim that in the twenty-first century, they will become one of the world’s top 10 electronics companies (Samsung Electronics 1997, Annual Report 1996). To accomplish the goal, their headquarters want not only a more worldwide open recruiting effort but also a more balanced Human Resource structure. “Globalization” which means that overcoming the shortcomings of a small home-base talent pool through recruiting of foreign or born educated talent. Samsung’s Human Resource structure prove that by accepting various kind of candidate or implementing outside partnership programs. One of Samsung top mission is to invest more and attract more, hold more exceptionally capable workforce from outside the country to fill in core business goals, especially talented scientists and engineers. Generally, it would seem that the so-called war for talent is the most prominent trouble of late at Samsung (Bea and Rowley 2003). Research show that 25% of clerical workers at Samsung hold a master or a doctoral certificate (Lee et al. 2002). Additionally, with traditional recruiting tools, Samsung also recruit college and university students and graduates by using scholarships and internship programs. For instance, students from countries within Europe, Asia and South America have granted scholarship programs to attend graduate programs at any Korean university.

In term of environmental, as the list of our planet’s concerns is increasing fast day by day, from global warming, waste disposal to loss of biodiversity and pollution. Kang et al (2017) introduced that there are two possible ways to deal with climate change, mitigation and adaptation. Despite of knowing these strategies, Korean government was keener on mitigation, which is to reduce greenhouse gas emissions, than adaptation in the past. However, he also pointed that adaptation polices have begun to develop as a part of country’s legislation in Korea.

The importance of educating and training employees or even C.E.Os about the understanding of climate change adaption have been increased in Korea in the past five years. Companies in Korea invested a great proportion of money to find appreciates means and strategies to adjust the climate change and also to get the related opportunities (Wakabayashi, 2013). In fact, the awareness about climate change of small and medium companies were significant low in comparison with lager enterprises (Jo and Nam, 2011), in spite of constitute more than 95% of the manufacturing industry (Nam, 2010). Therefore, larger sized companies (often measured by number of employees) are more likely to pay attention into research and development, education and training programs (Jung et al 2017).

In Samsung’s case, a superb enterprise in action against climate change, they are the leader in promoting the importance of the environment campaigns. For examples, they care about the future generations, since 2012, the “First Planet School” was relaunch as the “Green Challenge”. Most of the participant of the “Green Challenge” are students from elementary school throughout Korea, they raise the awareness and give them knowledge about our planet’s situation, also encourage the children to protect the environment. Samsung believe that they will provide children better understanding about conservation and preservation. In addition, the Climate Superstars Challenge has sponsored by Samsung Electronics America three years in a row, teaming up with the Boys and Girls Club of America (BCGA) and the USEPA ENERGY STAR program to raise awareness around energy efficiency and environmental problems to encourage youngster to protect our planet. In 2017, 162 Clubs took part in across the US (8% higher compared with the last year) and 1499 eco-challenges were committed by 11-13 aged children.

To make it more obviously, numerous environmentally-focused campaign has been planned by Samsung Electronics Co., Environmental Clean-up Actives and Environmental Education have been done around the globe by Samsung employees. For examples, Samsung Electronics UK visited West Wittering Beach to clean up wasted trash and litter along the shoreline on September 18, 2015. In Ukraine, three years ago, Samsung employees participated in environmental clean-up activates that were held by a local non-governmental organization. They cleaned up areas and then planted trees in park. Samsung still remain their commitment to raising the understand of environmental issues among children. In America, thorough Samsung Electronics’ educational activities, BCGA members were assigned tasks such a finding energy efficient products or decreasing standby power consumption. The best performing participant were received a reward which is the newest product of Samsung. There is a record that the program attracts more than 1000 participants from North America. Besides, Samsung Electronics Panama employees become teachers in elementary school to carry out a clean-up with students to prove the role of environment protecting.

Technology always a field that not only Samsung but also any big business conglomerate should put it in consideration in this generation. Day after day, we witnessed the proliferation of technology such as better ways to communicate with other people (social media, over-the-top app), more awareness was raising about global issues or more efficiently methods on educating and curing people (distance learning and online doctors). Samsung is one of best business can adapt new technology in their processes. According to the Yonha News Agency, the South Korean’s companies is developing robots to replace Chinese labour, their plan will worth about 16.75 billion KRW (14.8 million USD) and this amount of money will be used for developing key components that can allow more robotic parts made by Korea and lower prices of industrial machines to compete with cheap labour in China. There are many other large smartphones manufactures like Samsung now rely on Chinese labour due to its cheap wages and uncertain policies about worker. But their profit margin is affecting because of a spike in wages, making the development of automated factories is more necessary. The Korea’s Ministry of Trade, Industry and Energy once said, “Whenever affordable robots reach the market and are more widely use, it can bring about far-reaching innovations to the manufacturing sector and also lead to the creation of smart factories”. The use of robots currently represents for ten percent of the manufacturing process, but the ministry expected to rise to twenty percent by 2025.

Artificial Intelligence (AI) is also a field that Samsung invest a great amount of money in, the result can be seen in the interview with Geuanbae Lee, the Head of the AI Centre in early 2018. Geunbae Lee claim that they will collecting AI research capacity from within Samsung and recruiting global talent in order to establishing AI platforms which will serve as the foundation of Samsung’s AI technology. Besides, Lee also point out that Samsung has already proved that they can use Bixby (similar to Siri of Apple), they can cooperate with the world’s best universities and colleges and communicate with external industry talent through regular, open forum, when he was asked about his thoughts on AI progress in the future and how will Samsung lead the conversation within the industry.

Conclusion

 This essay found that external factors have been put into consideration by Samsung Group for years, it can be demonstrated by their strategies have listed.

The success of Samsung is cannot be denied, by consider these influences, their achievement came continuously. Overall, these factors affect day after day processes of organization. Adapting in this field is key action because at a moment, any business notices the change of economic, environment or technology can be a leader at their business field. A well-developed strategy for human recourses department help complements a company’s mission and goals.

References

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