Npower Case Study and PESTEL
In the past the training and development approaches were not followed by many organizations. It was believed that the managers or leaders are born not made. Activities of training the employees were considered the wastage of time and resources. However, with the passage of time it was understood by the theorists and the organizations themselves that training and development is very important for human resource building. Now training and development is one of the important functions of human resource management. Training is not considered as a cost rather it is considered as investment on the employees which ultimately become the assets of an organization (Beardwell, 2004).
Different methods and techniques are available to train and develop the human resource and those methods and techniques are modernized with critical analysis and their effect on human behaviors. There is one way to train the employees is to give them theoretical knowledge about the skills and give them an understanding of theories and procedures developed by different big organizations and theorists. This type of training and development comes under cognitive approach which majorly focuses on lectures, discussion, demonstrations etc. However the case company, npower does not follow this approach as they believe more in practical training rather than verbal or written training. Npower train their employees in real time working conditions where they understand the skills and adapt them and implement them on their job in the same time. This allows more sold grasps on the concepts and techniques as bookish knowledge might be different from the practical knowledge. And this also does not allow the generation of any conflict between the bookish knowledge and its practical implementation.
This type of training and development comes under behavioral methods. Npower puts the responsibilities on the employees shoulders and delegates the decision making power to their employees which give them a sense that they are the part of the organization. In this way the employees feel more responsibility on their shoulders and this enhances their leadership skills and capabilities. The company involves the employees of all levels in the decision making process as they trust the competencies of their staff. The decision making power is delegated to all levels depending upon the criticality of the decision and the risk associated with it. The strategic decisions which involve high risk are the responsibility of the top management. As designing and implementing the strategies gives a direction to all the organization and it is very important to show a right direction to the organization otherwise the whole venture will be a complete failure. After the strategically decision, comes the tactical decision which is required to be made for the proper implementation of strategies decided by the top level executives. Tactical decision is at the discretion of the managers. This is because it involves fewer risks as compared to the strategic decisions. Managers are in a better position to take such decision because they understand the strengths and weaknesses of their team members. This allows the managers to learn the analytical and managerial skills and furthermore the skill of taking strategy in to implementation phase. The next level of decisions is the operational decisions which are delegated to the low level employees. For instance an employee does not have to wait for the approval of his manager if he finds that a part of a machine is required to be changed. Such type of operational decision is taken by the employees themselves and this increases their operational skill and knowledge.
In this way npower delegates the decision making power at different levels and provides a platform of learning and development of the skills of their employees. This enables the organization to build a force of skilled human resource that gives them a competitive advantage over the others in the market.
Training and Development Theories and Npower Approach
Competitive advantage is referred to that ability of an organization which is not possessed by the other organizations and it is a competitive advantage which leads the organization to the top positions. There are many organizations in the world who are leading the markets by gaining competitive advantage in different fields of their business activities. One of the way in which a firm can attain a competitive advantage over the competitors is by building a force of superior human resource (Beardwell, 2004). Now the question arises that how this force of superior human resource can be build. The answer lies in a very important function of human resource management i.e. training and development. It has been observed that the employees or labor working in a competitive environment of market always welcome the training and development programs which can enhance their skills and knowledge (Davis & Bostrom, 1993). Now days every job holder understands that to sustain and grow in the career it is very important to polish their skills. It is not that time where one degree or diploma is sufficient for the whole life. Employees actively participate in several programs which are organized by their organization and it has been observed that in some organization employee’s demand from their human resource department to arrange such training and development programs. Successful organization of today has built their human resource work force over the passage of time. There is no doubt that this work force is a highly valuable asset for any organization and the only possible way to build this workforce is training and development (Barney, 1986). There are several theories available in literature which emphasize on the importance of training and development in the organization and provides different alternative methods for training and development. A discussion of four major theories of training and development is given below.
Theory of reinforcement – This theory emphasizes on the learning behavior of a person and suggests that the learner will repeat that behavior which is attached with a positive outcome or result. Skinner an economist of behaviorist school of thought proposed the theory of reinforcement and suggested that the training and development programs should be aligned with the organizational objectives and a positive outcome should be expected with such training and development programs. Further elaborating this concept suggested in reinforcement theory, it can be argued that there are several techniques available in human resource practices which can be associated with the training and development programs and the required suggestion by this theory can be fulfilled. Different types of rewards in the form of bonuses, salary raises, promotion and awarding of certificate after the training program can be associated with the training and development activities and these rewards will definitely generate a positive outcome. If this is done by an organization then according to the Skinner’s theory of reinforcement the trainer i.e. the employee will show more interest in the training and development programs held by the organization.
Theory of Learning Types – The theory presented by Gagne emphasized on learning of intellectual skills. These are such skills which are found rare among the persons. He suggested by different learning types in his theory and each learning type contains some external and internal conditions. The five categories of learning which Gagne defined in his theory include intellectual skills, verbal information, attitudes, cognitive strategies and motor skills.
Theory of Experiential Learning – Experiential and cognitive types of learning are differentiated by experiential theory of learning presented by C. Rogers. According to Rogers, the wants and needs of the learner are addressed by this type of learning. Experience gives the person a maturity and increases the learning power along with the knowledge. Due to the personal involvement, the learner is able to conduct a self-evaluation test, which allows him to understand the effect of learning on his/her attitude. The case company npower seems to follow this theory as the company puts an engineer in different working conditions and allows him to understand different fields of work. This helps the employee to gain experience and that person skills grow by gaining experience with the passage of time.
Theory of Social Learning – Social theory presents a new view of learning i.e. social. According to the presenter of this theory, Albert Bandura, direct reinforcement cannot address all types of learning. Here by direct enforcement means the training and development programs that is organized to enhance the skills. According to this theory such programs are not address all learning types as there are some social elements which cannot be taught. Those elements are learned by the leaner from his/her surroundings. Such type of learning is called observational learning and this learning is associated with the understanding of different human behaviors. The first type of learning defined in this theory is through observation. In an organization the environment and the surroundings plays a very important role. The environment should be very professional and the surroundings should be in such a way that the people (employees) learn from them. This theory also suggests that it is not necessary that the behavior is changed after learning something. It is expected that a person’s behavior changes after learning something, but it is not in all cases. Furthermore the theory also explains about the mental states which play a vital role in learning process. If the mental status of the person is negative regarding any learning activity then he will not take part in that learning process and even if he is forced to do so, he will not gain any positivity from that process. In organizational training programs the mental state can be made positive regarding the training and development programs by associating the rewards and benefits with such programs which will motivate the employees and help to build a positive mental state. The case company also follow this theory as it allows the employees to learn from the surrounding and provides an environment where they can learn from their supervisors/managers and coworkers.
Change Management and Human Resource Management
For the organizations throughout the world, constant change has become a necessity for the success and growth. Due to the intense competition in the market organization find them in a continuous process of change in order to cope up with the market and customer needs (Chandler, 1992). In this way change management has become a permanent function or activity of any business. Many organizations increase their effectiveness by using change strategically. However, for an effective change in an organization it is required that proper thoughtful planning is done and the employee’s acceptance is taken by properly communicating the benefits of change to the employees. Human resource department should be involved form the initial phase of change process (Beardwell, 2004). Change in the organization brings the impact on the minds of the employees and the change in employees attitudes cannot be neglected in this process which should be the prime responsibility of HR department to manage and to make that impact on the minds of the employee’s positive (Buchanan & Hucczynski, 1991). It has been observed in different organizations where the change has been brought by the management, that many of the people are uncomfortable with the change. So human resource management functions should be facilitating the change management in the organization and should focus on the removal of those discomforts among the employees brought by the change process. Human resource department should ensure that the reasons and benefits of the change process are properly communicated to all the employees and all the employees are clear about the change process. For effective change process implementation it is very important that employee resistance should not be there and employee resistance majorly occurs when they are not clear about the process and the benefit of the change (Buchanan & Hucczynski, 1991). Simply imposing the change in the organization will not result in the effective and successful change implementation. Furthermore, this will impose a bad impact on the employee’s mind and will affect the performance of the employees as the employees will have to work in the new changed environment forcefully and it is very much understood that desired outcomes and results cannot be taken by force. Human resource should be actively involved in the change process and this will bring a real change in the organization. The case company npower, engages it employees in all the decision making process. In the case study Strategic Spare Parts Project is discussed, which is an example of the employee involvement in the business decisions and polices. So the company considers the employee’s thoughts and suggestions which are very important for bringing change in the organization.
Npower’s HRM PESTEL Analysis
To identify and evaluate the external forces that can affect the organization directly or indirectly, PESTEL analysis is sued. This tool helps to examine and providing an in-depth analysis of all those forces under different heads which can potentially or currently affect the organization. PESTEL analysis is not only to evaluate the forces that can affect the whole organization; this analytical tool can also be used to identify the forces which affect the specific business units or functions of an organization. The human resource polices of the case company npower are under discussion and a PESTEL analysis is conducted of those external forces or factors which can affect the human reduce policies , practise and procedures of the company.
Political Forces – RWE npower is a leading organization in United Kingdome providing the energy services to the UK market. At United Kingdome there are different legislations which protect the consumer and employee rights. Furthermore there are laws which are used to maintain a fair competition in the market. So, the change in any kind of law and procedures will affect the human resource policies and practices directly. Furthermore, RWE npower is not only operating in UK, it is a German based organization and operating in different countries. So the changes in the laws and procedures in any country will affect the internal human resource policy of the organization. For a clearer understanding let’s consider an example of a law in United Kingdome where the minimum wage rate of a labour is 3.59 pounds per hour. If at any time UK government increases it to 4 pounds per hour or more then HR polices of the company will be affected directly and immediately.
Economic Forces – Economic factors which can affect the HR policies of the case company can involve the change in inflation rate and the global economic condition (Beardwell, 2004). The change in inflation rate will force the company to follow the laws which suggests the organization to increase the salaries and other benefits according to the inflation rate. On the other hand the economic condition of the country as well as the world also affects the businesses (Kelly, 1999). In the recent global economic recession several organizations were forces to reduce their workforce and a downsizing trend was scene in many big multinationals. Due to globalization where the organizations have to expand in different location across the globe the economic forces and their impact also changes (Rioux, Bernthal, & Wellins, 2008). For instance the economic condition in Europe will be much different as compared to economic condition in Asia. So, globalization gave birth to the need of managing several economic factors at different geographical locations.
Social Forces – Several social factors are there which affect the npower’s human resource strategies and polices. To provide the employees and labours with a safe and healthy environment is necessary for every organization operating in United Kingdome. There are several legislations that ensure that each employee or labour is fully insured. So, changes in such legislations and laws immediately affect the human resource policies of the organization operating in United Kingdome. In social factors there is also a factor of globalization that affects the organizational HRM policies. As due to globalization the world is becoming a smaller place to operate. Several organizations are operating worldwide which include several cultural and geographical differences. The organization has to manage those cultural and geographical differences. It is not possible for a multinational cooperation such as npower to maintain a static HRM policy for all it business units across the globe. Each geographical location has its own norms, believes and culture which have to be recognized by the organization. The human resource policies and procedures should support and correspond to the local employees and market needs (Rioux, Bernthal, & Wellins, 2008). For the case company which is operating in different geographical locations the human resources management has to be a strategic function rather than simply an administrative function. The company has to consider the local requirements of the labour and employees and haver to focus on utilizing the exiting local talent in order to save the operational and administrative cost of the organization.
Technological Forces – Technology is changing very fast. It is very important for an organization operating in competitive business world to automate the human resource function (Beardwell, 2004). The manual working and the procedures are now obsolete as it wastes a lot of time and resources. To be quick and dynamic organization must have to automate their processes. Npower’s human resource policies and practices will be affected with the change in the technologies. With the introduction of new technology the demand of the employees and the market increase and if the organization does not match up with the new technology then it will face a problem to retain the experienced and skilled workforce.
Environmental Forces – The health and safety act of United Kingdom puts a binding on the organization to provide healthy and safe environment to the employees. Environmental forces include mostly the weather changes. Human resource polices are indirectly affected by the environmental changes. Due to the change in weather it is quite possible that the employees have to be provided with different protective suits or air-conditioned plants etc.
Legislative Forces – The government of United Kingdome have passed different laws and regulations and currently there are several laws and regulations which are to be considered by the case company while designing any human resource policy.
United Kingdom’s Legal Environment
Through law the stability and security of the people is ensured and justice is provided according to it to the accused. Just like criminal and social laws there are also the business laws and legislations which are implemented by the state to ensure that the right of different stakeholders are protected. At United Kingdome several laws are there which protect the rights of employees, right of consumers and also there are laws which are to maintain the fair competition in the market and ensure that no organization manipulates the market. A fair and healthy competition is good for the industry as well as for the consumers, but to ensure this atmosphere in the business market the government has taken several steps towards this by implementing certain legislations.
As discussed in the PESTEL analysis of npower, the legislative factors also plays and important factor and can affect the human resource policies of the company. Here, different legislation or acts implemented by the government of United Kingdome. For protecting the consumer rights the first legislation under discussion is the consumer Credit Act. It was implemented in 1974 by the UK government and according to this all such business who want to provide credit facility to their customers will have to take approval from Director General of fair trading. For the organization like case company it is not possible to work only on cash, so the organization have to give credit facilities to the corporate clients such as British Telecom, Wembley Stadium and Ford. The enterprise that is found to mislead the customer regarding the price through its promotions can be held accountable under the consumer protection act which was implemented in 1987. Under this act all the organization have to present the actual price of the product or service and if there are any other charges or taxes with the price those should also be presented to the customer in the promotions.
The equal pay act which was implemented in 1970, suggests the organization to equally pay the candidates without any discrimination of gender. Another act implemented in 1974 suggests the organization to provide the employees a safe and healthy working environment. The minimum wage act implemented by the UK government in 1998, bound all the enterprises not to pay less than 3.59 pounds per hour.
Office of Trading (OFT) is responsible for maintain a healthy competition in the market and to ensure that no organization can create its monopoly. The fair trading act was implemented in 1973 under which Office of Trading can recommend that business to MMC (Monopolies & Mergers Commission which is found to be chagrin high prices form the consumer or performing such activities which are against the interest of public. Office of Trading can also set the price ceiling in order to eliminate the monopolistic behaviour of the organizations.