Unit 1 External and Internal Environment Assignment – Cadbury

Program	Diploma in Business
Unit Number and Title	Unit 1 External and Internal Environment - Cadbury
QFC Level	Level 5

 

Introduction

The Unit 1 External and Internal Environment Assignment: Cadbury explains the effect of the external and internal environment on the HRM practices of Cadbury. Cadbury is a multinational organisation that deals with the manufacturing of confectionery products like chocolates, biscuits, cakes, etc. The organisation has its headquarters in Greater London and operates in more than 50 countries worldwide. The external environment includes all the factors that have their impact on the organisation from outside the organisation. The political, technological, economic and demographic factors of the country comprise the external environment for Cadbury.  The internal environment of Cadbury is formed by the internal forces within the company that affect the HRM functioning of Cadbury. Learners can learn about the models of SHRM in the given unit, which includes policies and HRM procedures followed by Cadbury. This unit 1 external and internal environment assignment - Cadbury discussed the new approaches to HRM and those that have been introduced in Cadbury. Further, it provides knowledge of the barriers Cadbury faced during the implementation of these new approaches.

 

Task 1

1. Critically analyse the external and internal environment for the organisation.

The inner and outer surroundings of the organisation form its external and internal environment. The external environment of an organisation includes political, economic, technological and demographic factors, while the internal environment includes trade unions, organisation culture, organisation structure, productivity and objectives of the organisation. All these factors affect the organisational functioning. They not only affect the business strategy but also have their impact on the HRM practices of the organisation. Let us take an example of an organisation for analysing the internal and external factors. The organisation that is studied for the purpose is Cadbury. (Santangelo and Pini, 2011). Cadbury is a multinational organisation that deals with the manufacturing of confectionery products like chocolates, biscuits, cakes, etc. The organisation has its headquarters in Greater London and operates in more than 50 countries worldwide. John Cadbury established this company in 1824. Afterwards, the business expanded with the help of his brother Benjamin, followed by his sons George and Richard. The best-selling product of the company till now is dairy milk chocolate.

External factors for Cadbury: The external factors are the factors related to the outside world that have their impact on the organisational practices. Some of the factors from the external environment of the organisation include:

• Political factors: The formation of HR policies is formed by the organisation in accordance with the legislation and regulations for HRM passed by the government of the country. With the change in the government regulations, organisations need to change their policies accordingly. The HR policies of the organisations are very much bound by the laws of the country. The government regulations have their impact on all the processes of HR, from hiring, training, compensation, to the exit of employees. If we consider the UK government, it has changed from Labour Party to the Liberal Democrats, which has its impact on the operations of Cadbury. According to estimates, 3000 workers have been employed by UK factories, but the entry of skilled workers can be restricted, which may affect hiring in the future. Another example could be the rise in tax rates. In 2010, the value-added tax rates rose by 2.5%. This led to an increase in chocolate prices and a reduction in sales. That time, Cadbury Schweppes thought to reduce the operation cost by outsourcing HR and accounts practices. This results in downsizing the organisation and losses of jobs in the country. (Armstrong and Armstrong, 2011)

• Economic factors: The Economy of the country affects every function of the organisation, including HRM. Change in the economy affects the talent pool as well as the ability of hiring of organisation to hire. Wages and salaries of the employees are also affected by the economy of the country. In case of recession, many companies choose to downsize their workforce. The economic downturn in the UK affects the HR process of Cadbury. Cadbury decides to outsource the HR and accounts processes to other countries, leading to a loss of employment opportunities for the people. (Storey, Wright and Ulrich, 2009)

• Technological factors: Advancement in technology leads to the upgradation of organisational functioning. For achieving the competitive lead, organisations need to upgrade themselves with the new technology in the market. The change in technology affects every function of the organisation, including HRM. As the introduction of new technology stimulates HR to downsize the organisation and use the technology, so that the work that has been done by 2 or more people can be completed by a single employee. If we take the example of Cadbury, it believes in auditing and coaching. The assessment of the employees is done on a regular basis to identify the need for coaching. Proper coaching is provided to the employees in Cadbury whenever there is any introduction of new technology in the organisation.

• Demographic factors: Demographic factors lead to the cultural environment in the workforce. It affects the HRM in one way or the other way. As the organisation has expanded to different countries, it is not possible to control it from a centralised unit. Different cultures and standards have been followed by different demographic states. If we talk about Cadbury, the organisation has changed its structure from centralised to decentralised units because of the acquisition, which led to the splitting of the business into five units. The HRM practices then made were according to the demographic culture of that particular state or country. Different standards and policies were used to run the business accordingly. (Collings and Mellahi, 2009)

Factors of internal environment: The internal environment includes factors inside the organisations. The internal environment of the organisation is formed by its culture, structure, training and development, objectives of the organisation etc. All these factors affect the functioning of HRM in the organisation.

• Change in culture: The Culture of the organisation is formed by its values and beliefs. The HR practices followed in the organisation should complement the organisational culture. If there is a contradiction between the culture and HR policies, then the chances of conflicts between the organisational and personal goals will be high. If we take the example of Cadbury, a change of culture was felt after the acquisition of Adams and Trevor Bassett because the acquisition led to a dilemma of cultural options. Cadbury handles the situation by mixing both cultures so that the employees can understand each other better, and the new culture formed was known as “working culture together”. (Truss, Mankind and Kelleher, 2012)

• Change in strategies: Change in the strategies of the organisation affects the HR policies, as employees also need to be updated about the change in organisational strategy. Organisations use different strategies at different points in time. It is the duty or responsibility of the HR department to create the synergy between the organisational strategies and HR policies. Cadbury is a great example of this synergy. When Cadbury identifies that there is a need to work together for better productivity, then a teamwork approach is implemented in the organisation. When the organisation changes its strategy to the growth of employees, then the HR department introduces the policy of training and development for the employees. There are many such examples that suggest that a change in organisational strategies leads to a change in HR policies. (Mondi, Noël and Gown, 2005)

• Organisation structure: Organisation structure refers to the hierarchy in the organisation. It determines the flow of responsibilities in the organisation. The hierarchy also affects the HRM decisions. The organisation with a centralised structure has different HR policies from the organisation that has a decentralised organisational structure. Cadbury had a much more centralised structure before the acquisition. However, Cadbury soon identifies that the centralised structure is not working well for the organisation, as the organisation is facing business problems in the US. The reason behind this was that the UK management is not dealing well with the cultural differences. This leads to the splitting of the business into five units with their own standards and culture.

• Organisational objectives: Organisational objectives also affect the HRM practices in the organisation. The objectives of the organisation change according to the situation. The change in objective leads to a change in the working pattern of the employees. We can explain it by taking the example of Cadbury. The objective of Cadbury was to be a competitive leader. They thought to bring employees closer to get competitive leadership. For this purpose, Cadbury started offering its shares to the employees in 1974. It acts as a motivating factor for the employees, and they start focusing on giving better performance than before. (Avionic, 2013)

The internal and external factors have a great impact on the HRM practices of the organisation.

 

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Task 2

2. Using appropriate concepts and models of Strategic Human Resource Management, critically evaluate a variety of human resource policies and procedures.

Strategic human resource management is the process of integrating HR strategies with business strategies. It defines the plan of an organisation to attain its business goals with human resources. Strategic human resource management focuses on people as well as processes. It aims to attain the competitive advantage by maintaining and managing the skilled human resources in the organisation. It is concerned with the effectiveness of the performance of the organisation with the individual performance of the employees. SHRM focuses on the effective allocation of resources and matching the resources with future requirements. (Chadwick, 2005)

• The first approach to strategic human resource management is resource-based approach. This approach believes that there should be complementary relationship between the resource and the opportunities available. It suggests that attainment of the competitive advantage could be the result of effective and efficient human resource.

• Second approach to strategic human resource is strategic fit. The strategic fit approach believes in aligning the business strategies with the HR strategies. This approach suggests that there should be integration between the two strategies so that former can support the later in the processes of attaining organisational goals and competitive advantage over others.

• The third approach is the high-performance management approach that deals with the increase in productivity and quality of work with the help of human resources.

Strategic human resource management has focused on the integration of the fit between the strategy of business strategy and the HR strategy. Some models determine the strategic fit. (Go bind, 2014)

1. The Matching Model:  The main element of the matching model is the fit between external competitive strategies with the internal HR strategy. The model defines that there should be a link between the external and internal strategies, along with the association of the internal elements of the HR strategies. This model was proposed by the Michigan School. This model also explains the human resource cycle, which has four generic processes. The four generic processes are:

• Selection: Selection in this case is defined as matching the jobs with the human resources that is available to us. This led to the efficient use of the already available resources.

• Appraisal: Appraisal refers to managing the performance of employees. Managing the performance of the employee according to their skills helps in the efficient use of the human resource. (Wright, Snell and Dyer, 2005)

• Reward system: Reward system refers to providing rewards to the employees to motivate them. Motivation is driving force to better performance. Rewards can be in the form of monetary benefits, recognition in the organisation, other health benefits etc. Introduction of reward system helps in better performance of employees that leads to generate competitive advantage.

• Development: The Development of the employee is very necessary to attain the objectives of the organisation. The employee needs to be developed according to the changes in the external forces as well as the internal factors. The changes that occur in the external factors, like political changes, economic changes, etc, result in changes in the internal policies accordingly. Hence, the employees need to upgrade themselves to match other competitors. (Lustier and Hendon, 2013)

2. Harvard Model: Today, the market is demanding a more efficient workforce to have a competitive advantage through the utilisation of human resources.  This pressure leads to the generation of the Harvard Model, which has the perspective to manage people in such a way that has long-term effects. The model generated by the Harvard School is one of the most influential models. This model treats employees as resources and believes that human resources cannot be managed the same way as other resources in the organisation. The Harvard model has below considerations regarding the policies:

• Human resource flow: Human resource flow includes recruitment, selection, placement, assessment, promotion, and termination. Recruitment means attracting candidates for the job openings in the organisation. Selection refers to selecting the appropriate employee from the applicants for that particular job. After selection comes placement, in which the employee who is selected is placed into their designated position. The proper assessment of that employee is done using different methods that lead to a judgment of appraisal for that employee. The performance of the employee justifies his position in the organisation. An employee with a high performance pace gets the promotion, and after completing his work period, the employment is terminated. (Zhen, 2014)

• Reward system: This model also focuses on the introduction of the reward system in the organisation. The reward system is the motivating factor for the employees to perform better. Human resource is a very important part of the organisation to attain its goals. It is very necessary to motivate them to work efficiently for individual benefits in the form of rewards and for organisational benefits in the form of achievement of goals.

• Employee influence: Employee influence refers to the involvement of employees in important processes of the organisation. Giving them more power and responsibilities creates a sense of belongingness in the employee, and they work more efficiently towards the organisation. Employee influence also helps as a motivating force for the employees.

• Work systems: Work systems refer to aligning people according to the work. The employee should be aligned according to their skills. The delegation of work should be in such a way that it results in the efficient use of human resources. (Noe, 2006)

There are four HR policies that should be achieved by the application of this model:

• Commitment

• Congruence

• Competence

• Cost-effectiveness

 

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Task 3

3. Make recommendations relating to the attraction and retention of talent to support the future performance of the organisation.

Attraction refers to the recruitment of applicants. Recruitment is the process of attracting candidates to apply for a particular job. The HR department tries to attract people by means of advertising the vacancy. They try to reach the right candidates so that they can get a pool of talent to select their employees. People are attracted to the organisation not only by the means of advertising but also by the policies and the working environment of the organisation. Everyone prefers to work in an organisation that has an open working environment. The policies and the working environment of the organisation also have its impact on the retention of talent. Employee always works for their personal growth. If there is no opportunity for the employee to grow in the organisation, he tries to leave the organisation. This left the organisation with high turnover and loss of talent. (Chadwick, 2005). Cadbury is working on a strategic human resource management approach. They believe in a “best fit” approach for managing human resources. Cadbury focuses on enhancing the performance of its employees by adopting a coaching method. Assessment of employees is done by the method of auditing, so that the needs of coaching can be determined. The organisation adopted a very balanced approach to attain the objectives of the organisation, with the superior quality performance of the employees towards the shareholders. This approach of managing people's commitment to the achievement of goals proves to be a success factor for Cadbury’s development. Cadbury also believes in a change management approach. At the time of acquisition, Cadbury decided to adopt a new organisational culture so that all the employees could easily adapt to the culture. The commitment of the organisation to its employees leads to better performance by the employees. The company moves to decentralisation from a centralised unit. This decentralisation helps the organisation to make early decisions at each level of decentralised units. (Lussier and Hendon, 2013). Below are some of the methods or approaches that can be adopted by Cadbury for future success:

• Flexi time and work: The employees should be allowed to leave and enter the organisation according to their convenience, provided it does not affect their work. A number of working hours for a week or a month should be decided so that the employee can complete the working hours accordingly. Flexi work refers to a change in the department. If an employee has completed around 4-5 years of his career as an HR generalist and wants to change his department to training and development, then he should be allowed to do this by undergoing a proper process. (Noe, 2006)

• Training and development: Training and development are the need of the hour. With the rapid change in technology, the need to change the working pattern of employees has arisen. Updating the employees with the latest technology is very important to compete with the outside world. Employees want to work with an organisation that provides them with the knowledge of the latest technology. Training and development help in retaining employees in the organisation. (Analoui, 2007)

• Management participation in employees’ organisation: The trend has changed now. Employees, rather than the management, form the organisations. Organisations treat employees as the most important resource. Their retention is very necessary for organisational success. Any decision regarding the employees cannot be made without considering the concerns of the employees themselves. Employment involvement has its impact on the performance of the employee. If an employee feels that he belongs to the organisation, then he will definitely perform efficiently. It retains the interest of the employee to stay in the organisation for a long time.

• Collective bargaining: The existence of problems in the employee-employer relationship is very common. Employees always have problems regarding wages, working hours, colleagues, etc, and employers always have the problems of employee coordination, efficient performance, etc. Collective bargaining is the technique by which both parties can sit together and share their problems to come up with a solution. The mutual discussion led to better results.

• Collaborative management: Collaborative management refers to the involvement of employees in the management practices. This leads to create a sense of belongingness among the employees. The employees feel safe to work with an organisation that follows collaborative management. (Collings and Mellahi, 2009)

• Individualisation: These days, employees not only work for achieving the organisational goals but also work for their personal growth. The HR department should measure the performance of the employees individually so that the employee can be praised for their individual performance rather than group performance. (Paauwe, Guest and Wright, 2013)

• Work-life balance: Work-life balance is the phenomenon of balancing personal and work life. Advances in technology make it easier to balance life and work. The introduction of such programs that can be conducted online allows for work to be work sitting at different locations. Distance cannot be a barrier anymore. Webinars, online training, virtual meetings, and social apps are some of the programs that can be adopted by organisations. These programs are beneficial for the employees as well as for the organisation.

Barriers to implementation of new approaches: It is very easy to generate a need for change, but implementing the organisation is very tough. Many factors act as a barrier to the implementation of these changes. The organisational culture, strategies, resistance of employees to change, etc, are some of the barriers that restrict the introduction of these changes or adoption of new approaches to the organisation. (Armstrong and Armstrong, 2011)

• Lack of planning: For implementing any change in the organisation, planning is very important. The lack of planning creates a barrier to bringing out change. Proper planning of the process should be done to introduce the new approaches to the organisation as change in human resource management affects all the functions of the organisation.

• Unknown current situation: The management should realise the importance of analysing the current stage. The current situation and full knowledge of all the current processes running in the organisation are crucial to be studied before implementing any new approach. Change can only be implemented if the existing process is properly analysed.

• Employee resistance to change: Sometimes, employees become habituated to the current working environment and organisational policies, and they resist adopting any change in the organisation. The old employees are very particular about the working patterns they have used to work within an organisation for years. It is very difficult for them to adopt a new approach. (Paauwe, Guest and Wright, 2013)

• Increase the cost of training: If any new approach to HRM is introduced in the organisation, then it will lead to generating relevant training sessions for the employees. Suppose HRM has adopted a new online leave portal. Employees need to use that portal to upload a request for leave to HR. Now, this has led to the need to train the employees regarding the process of using that portal. Providing training to employees increases the cost of training. It also affects the work of the employees as they spend their working hours in the training room. (Rubery, Keizer and Grimshaw, 2016)

• Ineffective communication: Introduction of any new approach to the organisation should be properly communicated to all the levels of the organisation. Ineffective communication leads to improper understanding of the change by the employees. The top management people should keep in mind that making announcement does not mean that the employees can adapt the new approach. They need to be properly trained about using that approaches.

Every organisation has to make changes in its approaches according to changes in the external environment. Introduction of new approaches to human resource management helps in utilising the resources in a better way. The above approaches align the work with the availability of the human resource. Implementation of new approaches helps in competing with the external environment. (Phillips and Gully, 2009)

 

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Conclusion

The external factors of the organisation include technological, economic, political and demographic changes that have their impact on the organisation’s HRM practices. Some of the internal forces that affect the HRM practices of the organisation are organisational structure, culture, strategies and objectives. There are different models of strategic human resources that form the policies of HRM. Two of the major models are the Matching model of SHRM and the Harvard Model of SHRM. The organisation these days are very much concerned about getting a competitive advantage from the human resources available. Many new approaches have been introduced, like flexi hours, collaborative management, collective bargaining, etc, in HRM to attain those competitive advantages over others.

 

References

Books:

• Analoui, F. (2007).  Strategic human resource management.  London: Thomson.
• Armstrong, M. and Armstrong, M. (2011). Armstrong's handbook of strategic human resource management. London: Kogan Page.
• Lussier, R. and Hendon, J. (2013). Human resource management. Thousand Oaks: SAGE Publications.
• Noe, R. (2006). Human resource management. Boston, Mass.: McGraw-Hill.
• Paauwe, J., Guest, D. and Wright, P. (2013). HRM and performance. Chichester, West Sussex, UK: Wiley.
• Phillips, J. and Gully, S. (2009). Assessing internal job candidates. Alexandria, Va.: Society for Human Resource Management.
• Storey, J., Wright, P. and Ulrich, D. (2009). The Routledge companion to strategic human resource management. London: Routledge.
• Truss, C., Mankin, D. and Kelliher, C. (2012). Strategic human resource management. Oxford: Oxford University Press.

Journals:

• Afiouni, F. (2013). Human capital management: a new name for HRM?. IJLIC,10(1), p.18.
• Chadwick, C. (2005). The vital role of strategy in strategic human resource management education.  Human Resource Management Review, 15(3), pp.200-213.
• Collings, D. and Mellahi, K.(2009). Strategic talent management: A review and research agenda. Human Resource Management Review, 19(4),  pp.304-313.
• Gobind, J. (2014). Strategic human resource management: A brief introduction. SA j. hum. resour. manag., 12(1).
• Rubery, J., Keizer, A. and Grimshaw, D. (2016). Flexibility bites back: the multiple and hidden costs of flexible employment policies. Human Resource Management Journal,  26(3), pp.235-251.
• Santangelo, G. and Pini, P. (2011). New HRM Practices and Exploitative Innovation: A Shopfloor Level Analysis. Industry & Innovation, 18(6), pp.611-630.
• Wright, P., Snell, S. and Dyer, L. (2005). New models of strategic HRM in a global context. The International Journal of Human Resource Management, 16(6), pp.875-881.
• Zheng, C. (2014). Suzhi development: indigenous approaches to enhancing the quality of human resources. Journal of Chinese Human Resources Management, 5(2), pp.115-128.