SCANNING THE EXTERNAL ENVIRONMENT

At the heart of strategic planning is the knowledge gained from scanning the external environment for changes. Environmental scanning is the process of studying the environment of the organization to pinpoint opportunities and threats.

Environmental scanning=The process of studying the environment of the organization to pinpoint opportunities and threats.

Scanning especially affects HR planning because each organization must draw from the same labor market that supplies all other employers. Indeed, one measure of organizational effectiveness is the ability of an organization to compete for a sufficient supply of human resources with the appropriate capabilities.

Many factors can influence the supply of labor available to an employer. Some of the more significant environmental factors are identified in Figure 1. They include government influences; economic, geographic, and competitive conditions; workforce composition; and work patterns.

 

External Environmental Factors Affecting Labor Supply for an Organization

1. GOVERNMENT INFLUENCES

A major element that affects labor supply is the government. Today, managers are confronted with an expanding and often bewildering array of government rules as regulation of HR activities has steadily increased. As a result, HR planning must be done by individuals who understand the legal requirements of various government regulations.

Elimination or expansion of tax benefits for job-training expenses might alter some job-training activities associated with workforce expansions. Employee benefits may be affected significantly by tax law changes.

An organization must consider a wide variety of government policies, regulations, and laws when doing HR planning.

2. ECONOMIC CONDITIONS

The general business cycle of recessions and booms also affects HR planning. Such factors as interest rates, inflation, and economic growth help determine the availability of workers and figure into organizational plans and objectives. Decisions on wages, overtime, and hiring or laying off workers all hinge on economic conditions. For example, suppose economic conditions lead to a decrease in the unemployment rate. There is a considerable difference between finding qualified applicants in a 3% unemployment market and in a 7% unemployment market.

In the 3% unemployment market, significantly fewer qualified applicants are likely to be available for any kind of position. Those who are available may be less employable because they are less educated, less skilled, or unwilling to work. As the unemployment rate rises, the number of qualified people looking for work increases, making it easier to fill jobs.

 

3. GEOGRAPHIC AND COMPETITIVE CONCERNS

Employers must consider the following geographic and competitive concerns in making HR plans:

•     Net migration into the area
•     Other employers in the area
•     Employee resistance to geographic relocation
•     Direct competitors in the area
•     Impact of international competition on the area

The net migration into a particular region is important.

Other employers in a geographic region can greatly expand or diminish the labor supply. If, for example, a large military facility is closing or moving to another geographic location, a large supply of good civilian labor, previously employed by the military, may be available for a while. In contrast, the opening of a new plant may decrease the supply of potential employees in a labor market for some time.

Within the last decade, there has been growing reluctance on the part of many workers, especially those with working spouses, to accept geographic relocation as a precondition of moving up in the organization. This trend has forced organizations to change their employee development policies and practices, as well as their HR plans.

Direct competitors are another important external force in staffing. Failure to consider the competitive labor market and to offer pay scales and benefits competitive with those of organizations in the same general industry and geographic location may cost a company dearly in the long run. Underpaying or “undercompeting” may result in a much lower-quality workforce.

Finally, the impact of international competition, as well as numerous other external factors, must be considered as part of environmental scanning. A global competition for labor appears to be developing as global competitors shift jobs and workers around the world.

 

4. WORKFORCE COMPOSITION AND WORK PATTERNS

Changes in the composition of the workforce, combined with the use of varied work patterns, have created workplaces and organizations that are very different from those of a decade ago. Demographic shifts have resulted in greater workforce diversity. Many organizations are addressing concerns about having sufficient workers with the necessary capabilities, and have turned to such sources as welfare-to-work programs. The use of outsourcing and contingent workers also must be considered as part of human resource planning. As figure indicates, part-time employees are use din various ways. Working patterns and arrangements are also shifting, and these shifts must be  considered during HR planning.

 

Part-time Worker Usage by Type

ALTERNATIVE WORK SCHEDULES

The traditional work schedule, in which employees work full time, 8 hours a day, 5 days a week at the employer’s place of operations, is in transition. Organizations have been experimenting with many different possibilities for change: the 4-day, 40-hour week; the 4-day, 32-hour week; the 3-day week; and flexible scheduling. Many employers have adopted some flexibility in work schedules and locations. Changes of this nature must be considered in HR planning. These alternative work schedules allow organizations to make better use of workers by matching work demands to work hours. Workers also are better able to balance their work and family responsibilities.

One type of schedule redesign is flextime, in which employees work a set number of hours per day but vary starting and ending times. The traditional starting and ending times of the 8-hour work shift can vary up to one or more hours at the beginning and end of the normal workday. Flextime allows management to relax some of the traditional “time clock” control of employees. Generally, use of flextime has resulted in higher employee morale and reduced absenteeism and employee turnover. However, some problems must be addressed when flextime is used, particularly if unionized workers are involved.

Flextime = A scheduling arrangement in which employees work a set number of hours per day but vary starting and ending times.

Another way to change work patterns is with the compressed workweek, in which a full week’s work is accomplished in fewer than five days. Compression simply alters the number of hours per day per employee, usually resulting in longer working times each day and a decreased number of days worked per week.

Compressed workweek = Workweek in which a full week’s work is accomplished in fewer than five days.

 

ALTERNATIVE WORK ARRANGEMENTS

A growing number of employers are allowing workers to use widely different working arrangements. Some employees work partly at home and partly at an office, and share office space with other “office nomads.”

Telecommuting is the process of going to work via electronic computing and telecommunications equipment.

Other types of nontraditional work arrangements have been labeled in various ways.

Although it does not deal with working hours, another work arrangement is hoteling, in which workers check in with an office concierge, carry their own nameplates with them, and are assigned to work cubicles or small offices. A worker uses the assigned office for a day or more, but other workers may use the same office in later days and weeks.

Other employees have virtual offices, which means that their offices are wherever they are, whenever they are there. An office could be a customer’s project room, an airport conference room, a work suite in a hotel resort, a business-class seat on an international airline flight, or even a rental car.

The shift to such arrangements means that work is done anywhere, anytime, and that people are judged more on results than on “putting in time.” Greater trust, less direct supervision, and more self-scheduling are all job characteristics of those with virtual offices and other less traditional arrangements.