Environmental Scanning

Environmental Scanning
Identify external opportunities and threats and their effect on strategy. Examines seven key factors. 1-5 Scanning the External Environment p Identifying an organization’s external opportunities & threats is an integral part of the strategic planning process Environmental Scanning is a process that involves a systematic survey & interpretation of data to identify external opportunities & threats Assess how these factors currently affect the organization as well as potential future impact 7 FACTORS THAT SHAPE the EXTERNAL ENVIRONMENT Demographic: increasing impact of demographic factors, labor force is constantly changing Economic: rising health care costs, job insecurity, shift to knowledge based economy, emerging global economies, corporate governance, cont. demand for increased productivity Employment: career attitude, immigration, occupational & industry shifts, recruitment, unions, unemployment, turnover, relocation International: global economy, wage comparisons, trade agreements, International labor law Political: healthcare related legislation impacting benefits, healthcare delivery, FMLA, retirement funds, unemployment Social: changing definitions of family, increased obesity rates, quality of education Technological: new technology often results I sweeping changes in an organization, impacts training needs, changes jobs, impacts hiring needs © SHRM

Generational differences Nontraditional labor force
Demographic Factors Age Generational differences Geographic shifts Ethnicity Gender Unskilled labor Nontraditional labor force Organization NOTES p Monitoring demographic factors provides valuable info for an environmental scan. Organizations are increasingly impacted by Demographic Factors. The labor force is constantly changing. Age Gender Generational Differences – traditional, baby boom, generation X & Y. Each have different implications for HR. Geographic Ethnicity Unskilled Nontraditional labor – govt. agencies such as welfare-to-work & disability related agencies can be a source of labor. HR may be tasked with finding technologies that enable the disabled to participate more fully in the workplace. © SHRM

Economic Factors GDP Interest CPI rates Economic Factors Disposable
Inflation Disposable income CPI GDP Economic Factors NOTES p. 142 A variety of economic factors can influence the work of HR professionals: Rising health care costs Job insecurity due to layoffs & offshoring, can impact retention Shift to knowledge based economy may create temporary misalignments between skills needed & available workers Emerging global economies may expand organization’s geographic boundaries & demand greater cultural & economic fluency Corporate governance increased accountability requiring leaders to have greater understanding of financial reporting Cont. demand for increased productivity HR professionals need to demonstrate the economic value of productivity related initiatives Observation of Economic Conditions is an important part of environmental scanning Interest Rates Affect consumer & corporate confidence in the economy Gross Domestic Product Estimate for the total value of goods & services Consumer Price Index A measure of the average change over time in prices paid by consumers for goods & services Disposable Income Amount of $ (adjusted for inflation) that consumers have to spend after taxes are paid © SHRM

Employment Factors Attitudes toward careers Immigration
Occupational and industry shifts Recruitment Unions Unemployment Turnover Relocation NOTES p. 144 Employment Factors that should be examined as part of an environmental scan: Career attitudes p. 144 Change in jobs, careers & positions throughout our lives Older workers reluctant to retire Immigration p. 145 1 in 7 workers is foreign-born Impact on training initiatives Occupational & industry shifts p. 145 Shift from production to service provider has required changes in recruiting strategies Recruitment p. 146 Increase in geographic scope of recruitment changes as importance & complexity of job increases Unions p. 146 Despite declining membership, unions represent serious compliance obligations Typically gain strength during economic downturns Unemployment p. 146 Obviously y impacted by economic environment As economy improves, labor shortages can occur Turnover p. 147 How frequently employees change jobs Understanding turnover data & trends help to plan retention strategies Relocation p. 147 Becoming less desirable for many employees Employees more interested in challenging, satisfying jobs vs. climbing the corp ladder © SHRM

International Factors
GATT BRIC Global economy Wage comparisons Trade agreements International labor law OECD NAFTA NOTES p. 147 US economy continues to become more global. The global economy, wage comparisons, trade agreements, & international labor law should be monitored from an international perspective. International Factors Global economy see p. 147 BRIC economies – previous focus on EU & Japan has changed to Brazil, Russia, India & china Wage comparisons p. 148 Internt’l co’s often combine low wages w/latest technology to dominate the market Trade agreements p GATT/NAFTA/CAFTA International labor law p. 149 Trend toward global coordination of labor issues as well as trade issues. HR professionals must be familiar with international agreements that affect labor regulations in countries where they operate International Labor Organization – part of UN, focus on minimum standards for basic workers rights Organization for Economic Cooperation & Development One area of focus is on employment & industrial relations Issued guidelines regarding principles to be applied to both domestic & foreign operations in global enterprises whether or not a country is an OECD member. HR professionals should be aware of these standards of conduct, how they affect the org’s labor activities, & how these standards are expressed in local regulations & marketplace practices ILO © SHRM

Other Factors Legislation and regulatory guidelines
Political Legislation and regulatory guidelines Social Changing definition of families Education Strain on health-care systems Diversity Technology Advances Skills “Digital divide” Process changes NOTES Political Factors p. 149 New legislation & regulatory guidelines continuously being enacted @ federal, state & local levels Political Healthcare related legislation impacting benefits, Healthcare delivery FMLA & other types of leave (military) Retirement funds, Unemployment Benefits, Union Organizing Immigration, Exec Comp, Corp Governance, Environmental issues Social p. 150 Changing definitions of family, Increased obesity rates, Quality of education, increasing prominence of women and racial minorities in the workplace Technological p. 151 Constantly changing, increasing rate of change Advances – increased efficiency & accuracy Skills – provide training on new technologies that allow employees to work anytime, anywhere Quickly emerging technology makes it critical to monitor needed skill sets & educational options Digital Divide p now refers to lack of broadband access rather than access to computers Process Changes can be dramatic as result of technology changes © SHRM

What best illustrates the external force of politics on an organization?
A. Older employees decide to postpone retirement. B. Applicants expect domestic partner benefits. C. Employment visas for skilled workers are delayed due to additional screening requirements. D. An increasing percentage of the organization’s employees are non-native speakers. NOTES Answer: C A. Older employees decide to postpone retirement – it’s not clear that the reason is due to external force of politics B. Applicants expect domestic partner benefits – although political implications, more of a social trend C. Employment visas for skilled workers are delayed due to additional screening requirements. – impact of 911 D. An increasing percentage of the organization’s employees are non-native speakers. – although the issue of immigration has political implications, an increase in non-native speakers is not clearly attributed to political forces 6 Progress Check Questions p. 153 © SHRM

Cost-Benefit Analysis
Compares value received from an action to its cost. Can include tangible and intangible factors, but all must be monetized. Presents data as a ratio. 1-6 Measuring Strategic Outcomes p This section discusses financial measures, performance measures & rations that might be considered HR indicators of effectiveness Strategic Measurements A strategic organization function level) must measure its performance against objectives set during strategic planning process Performance must be examined from 2 perspectives Effectiveness – the extent to which goals have been met Efficiency - the degree to which resources have been used Measurement Techniques Tangible – e.g. impact to the bottom line Intangible – e.g. employee engagement Cost Benefit Analysis An attempt to measure the financial value of an action Can be used to predicatively or retrospectively p. 159 KEY POINT p. 159 Cost-benefit ratio = Value of projected or received benefits Cost Cost-benefit Analysis Methodology Define Objectives Define Values & Costs Analyze Data Report Analysis Findings © SHRM

ROI Demonstrates efficiency with which resources are used.
“Hurdle rate” is minimum ROI organization requires from project investments. Presents data as a percentage. NOTES p. 162 ROI is another tool used to evaluate economic investments. ROI focuses on fewer and more costs & results than Cost Benefit Analysis Shows efficiency with which the organization uses resources available for investment Like CBA, ROI may be used predicatively or retrospectively Desirable ROI is greater than zero ROI Methodology p. 164 (Figure 37) Plan - Develop objectives & evaluation plan Collect Data - Collect baseline & post-implementation data Analyze Data Isolate effects Convert data into monetary value Tabulate data & calculate ROI Report – Generate impact study ROI = © SHRM

Break-Even Analysis Determines the point in time at which total revenue associated with a program is equal to the total cost of the program. NOTES p. 166 Break-Even Analysis determines the point in time at with total revenue associated with a program equal the total cost of the program KEY POINT p. 166 Break even point = Cost x Time Savings * Time may be defined as the period of time most relevant to the specific analysis. For example, to calculate on an annual basis, time would be defined as 12 months. Class Example for Cost Benefit Analysis: Objective – make decision to hire administrative office position Values & Costs - Average profit per job = $500 & at least 20 calls per week are not answered so client must leave message. 20 calls x $500 profit potential = $10,000 possible loss per month Analyze Data - If 70% of projects bid go to contract, $7,000 potential loss is reasonable, lower to $5,000 or $3,000 potential loss per month to be conservative. Admin $10 per hour x 2080 hours per year = $20,800 per year Findings – Even with very conservative figure of $3,000 per month additional profit: $5,000 x 12 = $60,000 = (see example in book with 1.25 as result) $20,800 * Time = The period of time most relevant to the analysis. © SHRM

A. Calculate gross margin. B. Calculate return on investment.
HR is launching a company-wide training initiative. How can HR determine when the anticipated revenue return will exceed the cost of developing the program? A. Calculate gross margin. B. Calculate return on investment. C. Conduct a cost-benefit analysis. D. Conduct a break-even analysis. NOTES Reference Financial Statements Analysis p. 166 before asking question Financial Statements Analysis p. 166 Economic data can be extracted from financial statements & used to calculate financial rations, such as the rate of return the business is earning on the shareholders’ retained earnings & assets, and various profit margins, such as gross profit margins, operating profit margin, & net profit margin. Answer: D Calculate gross margin. Calculate return on investment. Conduct a cost-benefit analysis. Conduct a break-even analysis. © SHRM

Internal business processes
Balanced Scorecard SPHR only Mission Vision Values Finance Customers Learning and growth Internal business processes Aligns business function measures with organizational strategies. Measures the effectiveness of a department or the entire company. Considers perspective of all stakeholders. NOTES SPHR ONLY p. 167 Performance measures compare current performance against key performance indicators (KPIs) KPIs are quantifiable measures of performance used to gauge progress towards strategic objectives or agreed performance standards KPI examples: # of manufacturing defect in each completed product # of supervisors trained in q quality improvement process PP&HM - # of customers who request us to come back and do touch-ups after we do a walk-through Balanced Scorecard provides holistic assessment of an organization’s or unit’s performance, since it reflects multiple perspectives KEY POINT p The balanced scorecard provides a concise yet overall picture of an organization’s performance as measured against goals in 4 areas and from the perspective of various stakeholders: Financial KPIs p revenue growth, cost reduction, growth in particular division Customers p # of return customers, error rates in order processing, cust sat ratings Internal business processes identify & monitor key business process Learning & growth looks at employee abilities, quality of information systems& the effects of organizational alignment in supporting goals Examples of balanced scorecards: © SHRM

SPHR only For a balanced scorecard system to be implemented effectively, it should A. be introduced simultaneously to all divisions and departments. B. start at the bottom of the organization and work its way to the top. C. focus on specific measures that support business strategies. D. concentrate on tracking and reporting financial results. NOTE p. 162 Answer: C p. 170 Recommend the balanced scorecard be gradually implemented in every division, department & process Ideally, should start at the top & cascade down so peole have direction & understanding about the total organizational mission & vision Examples on p. 169 and 170 © SHRM

Audits Use objective criteria to assess “system” performance.
SPHR only Use objective criteria to assess “system” performance. Systems can include functions but also processes (e.g., hiring process). HR audits measure program effectiveness and policy/process compliance and suggest fixes. Conducted by HR staff or a third-party contractor. NOTES - SPHR ONLY p. 171 Audits use objective criteria to assess “system” performance. Systems can be varied, they can include functions but also processes (e.g., hiring process) HR audits measure program effectiveness and policy/process compliance and suggest fixes Conducted by HR staff or a third-party contractor HR audits ma be comprehensive or may focus on specific HR activities such as hiring & firing, discipline, performance management Figure 39 HR Audit Process Chart p. 172 Organizations are well advised to act promptly and thoroughly on audit findings and recommendations. © SHRM

Other Measurement Methods
SPHR only Organization’s most important issues (e.g., dollar sales per employee) Human capital ROI Turnover cost Compensation as a percentage of operating expense Training investment factor Time to start Cost per hire NOTES - SPHR ONLY p. 173 Other indicators of HR Strategic Performance: Measurements of Human Capital see p. 173 The Saratoga Institute (Price Waterhouse Coopers) is known for measuring human capital. Types of measurements they use include: Organization’s most important issues – unique to every org. Examples include % of union employees or $ sales per employee Human Capital ROI – comparing $s spent on pay & benefits to an adjusted profit figure Turnover cost – important to know cost when employees leave, avg. cost of turnover is at least 6 months equivalent of revenue per employee Compensation as % of operating expense - % of revenues allocated to direct cost of employees (only payroll employees) Training investment factor – total investment for building basic skills & improving productivity Time to start – from approval of requisition to actual start on job Cost per hire – cost of finding & selecting quality employees © SHRM

Primary and Secondary Research
(data gathered firsthand) Secondary (data gathered by others) Experiments Pilot projects Surveys/questionnaires Interviews Focus groups Direct observation Testing Historical data Benchmarking and best-practices reports Purchased data Professional publications Secondhand reports NOTES p. 174 Understanding Research Terms & Techniques slide shows chart on p. 174 Primary Research data gathered firsthand Experiments Pilot projects Surveys/questionnaires Interviews (exit, individual, panel) Focus groups Direct observation Testing Secondary Research data gathered by others Historical data Benchmarking & best-practices reports Purchased data Professional journals, books & other media Secondhand reports – e.g. “grapevine” reports Quantitative & qualitative research Reliability & validity © SHRM

Quantitative v. Qualitative Research
Collects and analyzes numerical data in a descriptive or inferential manner. Uses: Describe groups, compare results, identify trends or commonalities. Examples: Charts and graphs, statistical measures, regression analysis. Collects attitudes, opinions, and feelings. Uses: Identify strengths and weaknesses, generate ideas, determine preferences. Examples: Focus groups, in- depth interviews, questionnaires. NOTES p. 175 Quantitative & qualitative analyses are distinguished both by the characteristics of the data used & the manner of data collection. Quantitative: based on numeric data analyzed with statistical methods Collects and analyzes numerical data in a descriptive or inferential manner Uses: Describe groups, compare results, identify trends or commonalities Examples: Charts and graphs, statistical measures, regression analysis Qualitative: based on research that provides non-numeric data p. 173 Collects attitudes, opinions, and feelings Uses: Identify strengths and weaknesses, generate ideas, determine preferences Examples: Focus groups, in-depth interviews, questionnaires © SHRM

Descriptive Statistics: Measures of Central Tendency
NOTES p. 176 Descriptive Statistics are used to condense & summarize large quantities of data for quick understanding. Charts & graphs Measures of central tendency Try to describe groups of things or events by how much of a certain characteristic they have in common Identify typical characteristics of a data group KEY POINT p. 176 There are 3 measures of central tendency Mean – average score or value most common measure of central tendency Example on p. 177 Mode – value that occurs most frequently Median – middle point above & below which 50% of the scores lie © SHRM

Given the following data, what is the mode?
A. 3 B. 4 C. 5 D. 6 NOTES Answer: C © SHRM

Descriptive Statistics: Measures of Variation
Provide an indicator of variation around central tendency values. Range: Distance between highest and lowest scores. Percentile: Specific point that has a given percentage of cases below it. Standard deviation: How much scores are spread out around a mean. NOTES p. 178 Measures of variation provide an indicator of variation around central tendency values. It is often important to measure variability. Range is the distance between the highest and lowest scores Numerically, the range equals the highest score minus the lowest score. Percentile is a specific point in a distribution that has a given % of cases below it. Standard Deviation shows how much the scores are spread out around the mean or average. A normal distribution of data means that most of the examples are close to the average & relatively few tend to one extreme or the other Will have graphs that look like the bell curve © SHRM

Descriptive Statistics: Measures of Association—Correlation
Shows the relationship between two variables. NOTES p. 179 Measures of Association show the extent (magnitude) to which 2 or more factors (variables) are related & the nature (direction) of the relationship These measures are meant to indicate the dependence between 2 variables E.g. income & level of education or amount of air pollution & incidence of respiratory disease Measures of Association include: Scatter diagrams Show relationship between data items using x and y axes. Correlation see Figure 44 on p. 180 Measure of the relationship between 2 variables The correlation coefficient is measured on a scale that varies from +1 through 0 to -1 Complete correlation between 2 variables is expressed by either +1 or -1 When one variable increases as the other increases, the correlation is positive (at some value between 0 and +1) When one decreases as the other decreases, the correlation is negative (0 to -1) Complete absence of correlation is represented by 0 Regression Analysis p. 180 GO TO NEXT SLIDE © SHRM

Descriptive Statistics: Measures of Association—Regression
Refers to a statistical method used to predict a variable from one or more predictor variables. Determines: — Whether a relationship exists between variables and — The strength of the relationship. Causal relationship exists when two variables are related in some way. NOTES p. 180 Regression Analysis refers to statistical method used to predict a variable from one or more predictor variables Purpose is to determine Whether a relationship exists between variables The strength of the relationship Causal relationship exists when two variables are related in some way. © SHRM

Inferential Statistics
Form a conclusion by studying a sample of the population. Population: Entire group (all employees). Sample: Part of the population (20 random employees). Normal distribution: Expected distribution given a random sampling of a large population. NOTES p. 180 Inferential Statistics allows for forming a conclusion by studying a sample of the population A population is a group of persons or objects or a complete set of observations or measurements about which one wishes to draw conclusions Examples All the employees of an organization All the parts produced on a given day All the test scores of eight-grade math students in a given district Sample HR professionals often do not or cannot use an entire population to test a hypothesis so they instead draw conclusions based on a sample of the population Normal Distribution The expected distribution given a random sampling across a large population Inferential statistics includes the assumption that the sample & the population under examination conform to the characteristics of a normal distribution © SHRM

Qualitative Analysis: Interviews
Benefits Yield insightful information. Provide opinions and reactions to events. Allow for personal connection to interviewee. Are flexible. Cautions Interviewer’s nonverbals can influence responses. Interviewers should be careful not to ask leading questions. Interviewees may answer with what they think is “right.” NOTES p. 181 Qualitative Analysis is based on research that supplies non-numeric data, for example through the use of interviews, open-ended questions, or other methods that gather attitudes, opinions & feelings Interviews (individual or panel) See chart on p. 182 Benefits Yield insightful information Provide opinions and reactions to events Allow for personal connection to interviewee Are flexible Cautions Interviewer’s nonverbals can influence responses. Interviewers should be careful not to ask leading questions. Interviewees may answer with what they think is “right.” © SHRM

Qualitative Analysis: Surveys and Questionnaires
Cautions Less flexible than interviews. Can produce low response rate, which yields little data and impairs analysis. Benefits Ensure interviewee anonymity. Are efficient. Standardize data collection. NOTES p see chart on p. 183 Surveys & Questionnaires Generally use one or a combination of 4 approaches Rating scales “Yes”, “No” or “Don’t know” answers Structured questions with multiple-choice answers Open-ended essay questions Benefits Ensure interviewee anonymity Are efficient Standardize data collection Cautions Less flexible than interviews Can produce low response rate, which yields little data and impairs analysis © SHRM

Reliability Ability of an instrument to measure consistently.
Parallel form method compares results of similar tests administered to same group at two times. Here Test A shows less variability and is therefore considered more reliable. Candidate Test A Test B First test Retest 1 90 92 87 95 2 89 79 86 3 94 81 93 NOTES p. 183 KEY POINT Reliability is the ability of an instrument to measure consistently . It is also defined as the ability to repeat an experiment and obtain similar results Ability of an instrument to measure consistently Parallel form method compares results of similar tests administered to same group at two times Here Test A shows less variability and is therefore considered more reliable Reliability can be measured by the following: p. 183 Parallel Forms - uses 2 tests, identical in format & general content, but with different ways of expressing the same question Test/Retest - measures the degree to which scores are consistent over time Internal Consistency - extent to which tests/procedures assess the same characteristic, skill or quality Rater Agreement - to improve reliability among raters, training should be provided for raters © SHRM

Validity Ability of an instrument to measure what it is intended to measure. Answers the questions: What does the instrument measure? How well does the instrument measure it? A reliable instrument is not always valid. A valid instrument is always reliable. NOTES p. 184 KEY POINT p. 184 Validity is the ability of an instrument o measure what it is intended to measure . Answers the questions: What does the instrument measure? How well does the instrument measure? A reliable or consistent instrument or method is not necessarily valid, however, a valid instrument is always reliable. 11 Progress Check Questions p. 188 © SHRM

Ethics Ethics HR assumes a key role in creating an ethical organization by: Participating in the creation of an ethics policy. Determining supportive procedures and training. Creating a culture that values ethics. Conducting investigations and applying discipline. A system of moral principles and values that establish appropriate conduct. Ethics is not synonymous with legality. 1-7 Ethical Issues Affecting Organizations p KEY POINT p. 192 Ethics is not synonymous with legality, unethical actions may still be deemed legal Organizations today must be concerned with more than simply not breaking the law Investors, employees & communities all look to organizations to act both legally and ethically to fulfill their social responsibilities by modeling ethical behavior to employees & the community at large Code of Ethics KEY POINT p. 194 Can be defined as principles of conduct that guide decision making and behavior Establishes foundation for organizational norms & attitudes These norms are important in all aspects of the organization The common frame of reference provided by a code of ethics is essential during strategic planning process Who Handles Ethical Issues? See. List on p. 194 HR’s Role on a strategic level, HR should play a role in Determining an organization’s ethics policy Determining supportive procedures & training Creating a culture where ethics is valued & violations will result in disclosure Conducting investigations & applying discipline when required © SHRM

Which of the following would NOT be an ethical violation for an HR manager?
A. Recommending a qualified friend for an open position B. Telling a friend in private that layoffs will occur Having ownership in an outside firm under contract to the organization Allowing surveillance of locker room areas NOTES Answer: A p SHRM Code of Ethical & Professional Standards © SHRM

Privacy laws and regulations
Ethical Issues Workplace privacy Workplace violence Conflict of interest Diversity Copyrights Corporate social responsibility Privacy laws and regulations OSH Act Dodd-Frank NOTES p. 197 Workplace privacy p. 197 Employment information – access can be governed by sate law Privacy Act of 1974 – governs access to federal employee information Electronic Communications Privacy Act p. 200 Workplace violence p. 201 OSH Act requires employers provide a safe workplace free from work related Conflict of interest p. 202 Diversity Companies are required to cultivate diversity as a result of equal rights legislation & the Dodd-Frank Act Requires agencies regulating finance & banking to implement an Office of Minority & Woman Inclusion to increase participation of woman & minority-owned contractors Legal obligation & a business advantage Copyrights p. 203 Corporate social responsibility Copyright Act © SHRM

Foreign Corrupt Practices Act
Ethical Issues SPHR only Transparency Board of directors’ training Whistleblowing Bribes, payoffs, and kickbacks Insider trading SOX False Claims Act Dodd-Frank NOTES p. 204 Transparency p. 204 Refers to organization’s commitment to provide ample, accurate & timely information Board of directors’ training HR helps fulfill ethical responsibilities associated with BOD Whistleblowing p. 206 False Claims Act of 1863 – provides financial incentive Dodd Frank Act – whistleblower protection SOX – section 86 deals with whistlblowing Bribes, payoffs, and kickbacks p. 208 Foreign Corrupt Practices Act - prohibits US co’s from making corrupt payments to foreign officials for the purposes of obtaining or keeping business Insider trading When investors buy & sell shares of a company based on nonpublic information 4 Progress Check Questions p. 212 Foreign Corrupt Practices Act © SHRM

Legislative and Regulatory Environment
Laws are actions passed by Congress and state legislatures. Regulations reflect how laws will be implemented and often have the force of law. Regulatory agencies may issue guidelines that interpret how regulations will be enforced. 1-8 HR & the Legislative Regulatory Environment p Legislative Regulatory Environment Fig. 49 on p. 217 Laws are actions passed by Congress and state legislatures p. 217 13 steps – see chart on p. 217 Regulations reflect how laws will be implemented and often have the force of law Regulatory agencies may issue guidelines that interpret how regulations will be enforced © SHRM

A bill is introduced separately in House and Senate versions
A bill is introduced separately in House and Senate versions. Differences are significant. What happens next? A. After 30 days, if differences persist, both bills die. B. After each body passes its version, differences are resolved through the rule-making process. C. The Senate version prevails and is forwarded to the president. D. Both bills are directed to a joint conference committee. NOTES Answer: D © SHRM

Rule-Making Process Laws are made by legislatures, and rules are made by agencies. The public may comment via public hearings, conversation, , or letter for a specified time period. NOTES P. 219 Rule-Making Process Rule is proposed Public comment is invited The final rule is issued Important Legislative & Regulatory Terms Amendment - Modification of the Constitution or a law & may be either formal (written) or informal (unwritten) Bill – Proposal presented to a legislative body for possible enactment as a law Public comment period – The time allowed for the public to express its views & concerns regarding an action of a regulatory agency Quorum – the number of members of an organization that have to be present before official business may be conducted Regulation – a rule or order issued by a government agency; often has the force of law. Interpretation bulletins distributed by government agencies help decipher regulatory developments Resolution – a legislative measure limited in effect to either Congress or one of its chambers Veto – action of canceling or postponing a decision or bill 2 Progress Check Questions p. 222 © SHRM

Environmental Scanning
Identify external opportunities and threats and their effect on strategy. Examines seven key factors. 1-5 Scanning the External Environment p Identifying an organization’s external opportunities & threats is an integral part of the strategic planning process Environmental Scanning is a process that involves a systematic survey & interpretation of data to identify external opportunities & threats Assess how these factors currently affect the organization as well as potential future impact 7 FACTORS THAT SHAPE the EXTERNAL ENVIRONMENT Demographic: Economic: rising health care costs, job insecurity, shift to knowledge based economy, emerging global economies, corporate governance, cont. demand for increased productivity Employment: career attitude, immigration, occupational & industry shifts, recruitment, unions, unemployment, turnover, relocation International: global economy, wage comparisons, trade agreements, International labor law Political: healthcare related legislation impacting benefits, healthcare delivery, FMLA, retirement funds, unemployment Social: changing definitions of family, increased obesity rates, quality of education Technological: © SHRM

Generational differences Nontraditional labor force
Demographic Factors Age Generational differences Geographic shifts Ethnicity Gender Unskilled labor Nontraditional labor force Organization NOTES p Organizations are increasingly impacted by Demographic Factors. The labor force is constantly changing. Monitoring these demographic factors provides valuable info for an environmental scan. Age Gender Generational Differences – traditional, baby boom, generation X & Y Geographic Ethnicity Unskilled Nontraditional labor © SHRM

Economic Factors GDP Interest CPI rates Economic Factors Disposable
Inflation Disposable income CPI GDP Economic Factors NOTES p. 142 There are numerous economic factors within the employment segment of the external environment that should be examined during an environmental scan: Rising health care costs Job insecurity due to layoffs & offshoring, can impact retention Shift to knowledge based economy May create temporary misalignments between skills needed & available workers Emerging global economies May expand organization’s geographic boundaries & demand greater cultural & economic fluency Corporate governance Increased accountability requiring leaders to have greater understanding of financial reporting Cont. demand for increased productivity HR professionals need to demonstrate the economic value of productivity related initiatives Observation of Economic Conditions is an important part of environmental scanning Interest Rates Affect consumer & corporate confidence in the economy Gross Domestic Product Estimate for the total value of goods & services Consumer Price Index A measure of the average change over time in prices paid by consumers for goods & services Disposable Income Amount of $ (adjusted for inflation) that consumers have to spend after taxes are paid © SHRM

Environmental Scanning

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