Competitive Intelligence Gathering: HR's Role in Business Success

In the context of business, HR plays a crucial role in integrating the successes and shortcomings of competitors to ensure internal processes do not become obsolete. This includes recognizing industry and competitive environments as well as internal factors that impact HR activities. The HR department utilizes data to plan and make informed decisions, and also engages employees by using HR metrics and other techniques to stay ahead of competitors. It is essential for businesses to understand their external and internal environmental factors to develop effective HR strategies.

Contents
Introduction.................................................................................................................................................2
HR Models..................................................................................................................................................2
HR Strategies and insights to increase Organization Performance..............................................................4
SWOT Analysis.........................................................................................................................................5
PESTLE Analysis........................................................................................................................................5
Porter’s five forces model........................................................................................................................6
Factors affecting HR Function and Organization........................................................................................7
Internal factors........................................................................................................................................7
External factors........................................................................................................................................8
Stages of Strategy Formulation.................................................................................................................10
Methods to measure business performance...............................................................................................12
Role of HR in change Management...........................................................................................................13
Sources of business and contextual data....................................................................................................14
References.................................................................................................................................................16

Introduction
The HR department plays an important role in an organization. This department can produce
better ideas and increase productivity. The goal of the HR department is to produce strong
workforce, which can achieve the goals of the organization. There are external and internal
forces that shape up the HR agenda in the organization. External forces are Competition with
other companies which encourage firms to practice best HR policies. Other internal forces are
the decision to excel in performance, ethics and accountability.
HR Models
HR Models provide an analytical framework for studying HRM practices like situational factors,
competence etc. They help to select best selection and training methods. These models will help
to understand the key HR policies thoroughly.
HR Models are as follows:
 The Fombrun, Tichy and Devanna Model
This was the first model which was invented in 1984, it laid stress on the four functions of HR
and how are they interrelated. These functions were selection, appraisal, training and
compensation. These four components of human resource management are the best elements
which contribute to the organization’s development. This Model is incomplete as it ignores
environmental factors (Neha, 2015).

 The Harvard Model
This Model is complex as it consists of six elements of human resource management. The
elements included in the models are: stakeholders, interests, HRM policies, HR outcome, HR
situational analysis, HR long term results and feedback approach. These functions will contribute
to the overall effectiveness of the organization.
 The Guest Model
This model was designed in 1997 and this model explains that HR manager can apply few
strategies which can increase overall performance of the organization. The outcomes will be seen
in the form of behavior and financial outcomes. The logical sequence of six components, shape
up this Model (Beer, 2009). The components are HR strategy, practices, results, behavioral
changes, performance and financial rewards. Although it claims to be the superior model, but
people dynamics are so difficult that no model can analyze it deeply.
 The Warwick Model
This model also revolves around five elements which are external factors, micro factors, business
strategy, HRM context and HRM content. This is a different model as considers external
environmental factors impacting HR practices. Organization aligning between external and
internal factors excels in performance (Morgan, 2017).

HR Strategies and insights to increase Organization Performance
HR strategies are made to increase overall performance of the organization. All functional areas
of HRM strategies need to match overall business goals. Few of these strategies and insights to
increase performance are:
- Top leaders and managers affect the success or failure of an organization. Successful
leaders will guide their team in a positive direction and make them accountable for the
goals of the firms (Moore, 2017). By conducting effective research, leaders are being
recruited who can give better results. HR professionals need to become a leader to guide
others to achieve goals.
- The next strategy is to select the best talent in the company. HR analysis the staffing
needs and plans, recruiting, training talent. This strategy includes identifying job
responsibilities like skills, knowledge required. Job Descriptions are being developed for
competencies and responsibilities (Sullivan, 2011).
- HR also makes strategies to build high performing culture. Organizations which are high
performing define the performance measures properly. Top leaders shape up the best
culture which motivates employees to change their behavior and adapt to high performing
culture for best results.
- HR tools are being used to understand employee’s reviews like employee satisfaction
surveys. Employees are being asked about work culture, opinions, rewards,
compensation. Strategies are being made on feedback of employees. Feedback from
customers is another source of HR strategies (Corbell, 2017).

Analysis of business is important for both big and small owners to increase performance. There
are many ways which helps in analyzing business activities. Few of these measures to analyze
are SWOT, STEEP, STEEPLE, and PEST.
SWOT Analysis
It is often done to analyze basics of the business. It is important as it describes strengths,
weakness, opportunities and threats of the business. This is done to know where the business
stands and can be done for products, places and people too. Strengths describe where the
business stands, its unique features, factors helping to promote sales. Weakness describes
improvements required and circumstances which should be avoided. Opportunities are those
what are the latest trends in the market, whereas threats are competitors and obstacles for the
business.
PESTLE Analysis
Like SWOT analysis, PEST also studies four dimensions which are Political, Economical, Social
and Technological. It studies the threat and opportunities of a SWOT analysis in details. The
Political factors include Government policies, tax policy, stability, restrictions and tariffs.
Economic factors of business include economic growth, population growth, safety concerns.
Technology factors are the latest technology and market trends like R&D activity and rate of
technology changes. Legal factors include legal aspects related law and regulation in the country

or in the city where the business is run. Environmental factors are also studied, like pollution,
disasters, water, wind and other environmental factors.
Porter’s five forces model
Porter’s five Model and Pestle analysis are two business tools for analyzing the competitiveness
of market and business. Porter’s five forces model helps companies to improve competitive
position. PESTLE on the other hand, identifies various macro environmental factors affecting
competitive standing (Kokemuller, 2017). Porter’s five forces examine five forces like supplier
power, competitive power, buyer power, threat of substitute and threat of entry. In contrast
PESTLE analysis different environmental factors like Political, economic, social, technological,
legal and environmental. PESTLE is used to help develop business strategies by exploring
various opportunities. Porter’s five forces are targeted to create a better situation of strength,
weakness and avoid making repeated mistakes. It helps business to take full advantage of
competitors in the market.

Factors affecting HR Function and Organization
There are many internal and external factors which affect the function of the business: Some of
these are:
Internal factors
1. Mission – This is an important step which tells why and for what the organization is working.
HR’s role depends on the mission of the company. Eg: Mission of Starbucks is to nurture the
human spirit that is why there HR is inspired to make a motivational and inspiring environment
in their café house.
2. Policies – Policies are the guide maps in the organization and direct the way objectives are
achieved. Example: providing high compensation for high performing employees, providing a
safe environment for employees (Kammar, 2016).
3. Culture – These are the shared values, beliefs and habits prevailing in the organization. The
culture affects the functions and organization’s operations. The HR department has to respond
positively to the culture of the organization. Eg: Starbucks creates an environment where
everyone respects each other, hence HR responds in the similar manner.
4. Conflicts – Conflicts arises due to clashes between personal and organization’s goals.
Organizations who avoid conflict and work amicable succeed in the long run.
5. HR Systems – The survival and development of organization performance depend on quality
of HR. Organizations are creating HRD departments, quality circles, open communication. These
initiatives are opening new gates for progress in this field.

6. Organization Structure – There are two types of structures one is flat and another is tall. Tall
or pyramid type of structure is suitable for labor areas. The authority is at the top and power is
distributed in hierarchy positions (Rajshekar, 2016). Flat organizations are created to boost
technology in organizations. This structure is suitable for organizations where educated people
are employed. Employees operating are very less. This makes the role of HR very important and
challenging.
External factors
There are external factors which affect the organization and HR function:
1. Technology – Technology is changing at a very fast pace; hence technical personnel are being
hired. Recruitment of technical person is important to match the job requirement. Eg:
Engineering Companies hires B-tech because of the technology changes and job roles.
2. Economy – Economic condition affects the financial position of the organization; New HR
programs are being run under favorable economic conditions. With unfavorable economic
conditions, programs are being cancelled. Thus number of economic factors affects HRM and
organization’s operation (Mullins, 2014).
3. Labor union – Employees in the organization also have strength to affect the industry. Labor
Union bargain with management over employment issues. This results in HR decision to be
made collectively.

4. Competition – With technology advancement and competition, employers' expectations of
their staff have increased. The existing employees are expected to learn new skills, knowledge,
and cope up changes with the organization. This makes HR role to be more important as they
need to be updated and apply new roles time to time. They need to create a positive change
environment for its employees (Genc, 2014).
5. Legal Factors – HR cannot make HR policies while considering legal factors. The
Government has enforced various laws on the organization and HR needs to make policies as per
these legal constraints. Example – to maintain diversity and equality, the US Government has
enforced equal pay for all. The government has made various laws for maternity leaves which all
companies have to follow.
6. HR in the Country – The structure, values and education in a country also affect Human
resource management function. Each country has employees from different backgrounds which
challenges HR function to manage them effectively. Changes occurring and the country values
affect the values and culture where organization exists. Changes in the education system have
changed HR function. Well educated staff challenge and questions management staff for their
rights and desires (Benjamin, 2017).
Thus, there are many external and internal factors that affect the Human resource management
role and function.

Stages of Strategy Formulation
It refers to the process of selecting the right course of action so that organization can achieve
their goals and objectives. Strategies are made to ultimately reach the vision of the Company.
The process of strategy formulation is divided among various steps. HR’s role is important in
each of these strategies:
1. Making Objectives – Firstly, it is important to set long term objectives in the organization to
meet overall mission and vision. Strategies are medium to achieve the objectives of the
organization; it is a process as to how can the objectives are achievable. Hence, the strategy helps
to reach the objectives of the Organization. Before fixing objectives, it is essential that all factors
are analyzed for strategic decision. HR can help management to determine their own
department’s objective and motivate all other departments to do the same. After collecting
objectives from all firms, strategy is being formulated.
2. Analyzing Environmental factors – The next step is to analyze the external environment where
the organization operates. The competitive position of the organization, legal research,
qualitative and quantitative researches is done regarding the existing product line. The reason for
such analysis is done to make sure the management identifies company’s own strengths and
weakness and competitor’s strength and weakness. The organization has to keep a check on the
competitor’s move and action to identify various threats and opportunities. HR can help
conduction these SWOT and PESTLE for companies as it is the sole department who collects
information from different departments. It can also involve marketing to do the same (Bhasin,
2016).

3. Setting Quantitative Targets – The organization quantitative targets to achieve objectives of
the organization. This is done by dividing the role of each department and diving work to
different personnel. Each employee will be given their individual targets in the form of their job
responsibility and measures are taken to check if they are achievable. These small targets are a
strategic decision to achieve long term objectives of the organization.
4. Strategic Decision as per department’s plan – In this step, it is identified that how each
department is contributing towards organization’s objective and accordingly plans are made to
achieve each unit’s goals. This is done by analyzing various environmental trends in the market.
5. Performance Analysis – Performance Appraisals are done by HR departments to check the
gaps between planned and desired performance. Critical analysis of past, present and future
performances is done. This evaluation identifies the gaps between employee performance and
long term goals of the organization. Performance analysis also determines how to compensate
employees based on their performances (Nabradi, 2009).
6. Choice of Strategy – This is the last step in strategy formulation. There are many strategies
which are being made, out of which the best one is selected and implemented. Strategies are
chosen as per the strengths, potential and weakness of an organization’s internal and external
environment.

Methods to measure business performance
Business performance can be measured by both traditional as well as the modern indicators. The
traditional methods though are only based on assessing the business capacity by way of required
financial indicators like profit, turnover and market share, but there are limitations to this
approach, as it does not provide any detail evaluation and touches upon only the financial angle.
Hence the new approach is to make use of the non-financial indicators for measuring the
business performance (Rosova & Balog, 2012). Few modern indicators are a performance
management system that measures the performance of the processes and employees with regard
to the company’s performance and objectives. The other modern indicator for evaluating
business performance is balanced scorecard which makes sure that the businesses elucidate its
mission and vision and transfer them into real business. The other modern indicator that is used
is the logistic company system (Gundlach, 2015).
HR has a very crucial role to play in business for planning and thereby help in working towards
the mission of the business. Example, If the marketing department strategy is to meet a particular
task, then it is required that a human resource strategic plan is also made to meet that target.
Even in case of downsizing, HR is blamed, but downsizing is the resultant of a failed business
strategy. Therefore, it is important that HR has good action plans in place to support the
business strategy. All the employees of the HR department should have knowledge of the
common goals of the business (Orion Partners, 2016).

Role of HR in change Management
HR department also has a similar important role to play in the change management of the
business. As a change leader the department has to take complete responsibility of the planning
of the change project along with its implementation. It could be either on a big scale or a small
scale like restructuring of the team or implementation of a new project. The HR department as a
change leader also has the responsibility of providing resources, practical tools, reading material
and helps the target audience understand more about the structure thereby helping in successful
change management. It also acts as an advisor in cases of restructuring of the sales function or
for the whole department. HR department also acts as a change participant. It helps in
troubleshooting the problems and controls the reactions of others during a change event. HR
experts guide the business to pay heed to essential features even in case other departments don’t
feel the same. It is ultimately the HR department who lays down the foundations of successful
change management irrespective of skills, tools and interventions that are being used during the
process (Gundlach, 2015). HR practitioners have to understand the architecture and make sure
that the same is applied by educating the different teams that are involved in the change process.
Example, in case of a merger of a company, HR will be undergoing a complete transformation,
or IT system will be implemented or the company might be shifting. In all these situations there
will be big assignments with several work streams and the HR practitioners will have to provide
a smooth platform to make sure that the structural design of change is taken into consideration
while making plans. Likewise, even the smallest change too has to be noticed by the HR
department and all the components of structural design should be paid heed to.

Sources of business and contextual data
There are various sources for gathering business and contextual data by the HR department. HR
metrics are one such tool which is popularly used by the businesses these days. HR metrics help
in evaluating the performance of the HR department. It helps in taking pertinent decisions
regarding turnover and employee engagement. The HR metrics, that is as per the corporate
strategy helps in improving the effectiveness of the business and is useful for planning purposes.
The important data can assess by various uses of HR metrics in different HR functions. A very
usable HR metrics are cost per hire. It helps in finding out the expense of recruiting, and
training. There are numerous factors that become a part of cost per hire metrics like time spent
on recruitment, the cost of pre-employment assessment, the cost of material, lunches etc. It also
helps in measuring diversity. For calculating diversity, the HR department sort the data on the
basis of race, sex, age and disability. The metrics also help in calculating a subjective practice
like employee engagement. The source of information about assessing the enthusiasm level of
the employees is from employees’ surveys, the similar surveys undertaken two times in a year
can help in knowing the shift of trend in employee engagement. The workforce metrics also help
in forecasting production capabilities and requirements of labor at the time of attrition. The
source of information is the data of prior year’s resignations. Thus HR metrics help in planning
and creating a staffing strategy when there is a less employee count and more demand of the
productivity.
HR helps in compiling and assessing the information that is churned out from metrics and other
such tools for the purpose of utilizing the information required by the management for further
planning of the business, it has a direct impact on the overall strategy of the business. HR has a
very big role to play in the strategic decision making in the business. It also helps in providing an

early warning system that helps in knowing about the essential approach of the competitor’s
strategic decision. A proper retrieving of information helps in having an edge in having the
competitive advantage. HR takes all its decisions by making use of internal, industry and
competitive data because decisions taken in the absence of competitive information can have a
bad effect on the business’s competitive advantage. Internal + Industry + Competitive =
Informed Decision (Missildine, 2013). In order to properly plan, it is important for the HR
department to have good knowledge of pioneering HR tools and practices that are being run in
the competitor’s business. Then it is further required by them to slot in what is learned through
the competitors' practices or use a counter strategy. The HR department recognizes and
categorizes the companies that the applicants are taking into account and reveal new business. It
is the role of HR to integrate success and shortcomings of the competitors to own a business. HR
has to ensure that the internal processes do not become obsolete. The information on competitors
is also essential when there is any change in the planning, knowledge of what the competitor is
doing significantly accelerates the probability of success. Because, the economies of the world
are on the rise, therefore more decisions will be taken with less resources and so it is important to
have full information on recognizing internal, industry and competitive environment. There are
lots with data with to the HR department, which it utilizes for planning after completely filtering
the data. The data is assessed and packaged in a manner which is advantageous for the business
in planning. Recruiting and engaging the employee of any industry is of paramount importance
as the companies as well as the candidates are becoming more and more competitive and to have
an edge over the competitors more and more companies are using HR metrics and other such
techniques.

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