Human resource

management (HRM)
Appropriateness of organizational structures and external factors.
Businesses operate in dynamic and evolving environments.
In the ever-more competitive corporate world, organizations have
to continually review their practices and change/adapt
accordingly to remain relevant and attractive in the market. The
most successful organizations create structures and build
processes that encourage and embrace change. However, people
often find it challenging to adapt to change; it is certainly not
easy for most employees (see reasons for resistance to change).
It is important for businesses to adapt to change if they are to survive.

- The external business environment (or the STEEPLE factors) mean

that forces of change require the attention of businesses and
decision makers to adapt their practices as well as their
organizational structures. Some of these changes create
opportunities whilst others can present threats to businesses and
their operations.
- For example, increased competition, new technologies, and
evolving consumer habits and tastes all have an impact on
organizations, causing them to adapt their business objectives,
strategies, and business operations.
Business success emerges from the willingness and ability to research and
respond to signals in both the internal and external business environment
in order to meet the ever-changing needs, wants and preferences of
customers.

Those that do not embrace and adapt to change simply fail to survive.

For example, in December 2020, after an extremely challenging year for

all businesses due to the global coronavirus pandemic, IKEA stopped
production and distribution of its physical catalogues. The home furniture
retailer had used catalogues for 70 years prior to 2020, and opted for
online catalogues instead as an increasing number of customers switched
to e-commerce options.
Managers might question the appropriateness of
organizational structures given changes in external factors.

These may be planned (such as a merger or joint venture) or unplanned

(such as a hostile takeover or outbreak of an infectious pandemic).
External factors that might prompt a change in an institution's
organizational structure include technological advances, the intensity of
competition, and changes to the growth and evolution of businesses.
Managers might question the appropriateness of
organizational structures given changes in external factors.

These may be planned (such as a merger or joint venture) or unplanned

(such as a hostile takeover or outbreak of an infectious pandemic).
External factors that might prompt a change in an institution's
organizational structure include technological advances, the intensity of
competition, and changes to the growth and evolution of businesses.
For example, organizations that embrace the latest
technologies tend to prosper, whereas those that
resist or respond slowly tend to become less
competitive. Such developments have meant that
business managers have access to much more
information in order to support decision-making.

The examples below show how changes in external factors can impact
on business operations and hence organizational structures.
Mobile
technologies
Enabled more people to work from home. This
was evident in many parts of the world during the
COVID-19 pandemic that caused many people
across different industries to have to WFH.
- Organizational structures may
need to change.
- Many businesses realised the
potential benefits of having
fewer people in the office
- higher productivity due to staff
not having to commute to and
from work, for example.
- Gig economy (flatter structures)
Big data, data
analytics and
data mining - This can mean fewer in-house
market researchers are required (so
Enabled retailers to improve their customer a smaller or restructured marketing
loyalty programmes (see Management team) resulting in businesses
Information Systems). This can mean fewer switching to flatter organizational
in-house market researchers are required (so a
smaller or restructured marketing team) resulting structures.
in businesses switching to flatter organizational
structures.
Changes in
digital camera - However, changes in digital camera
technologies and the development
technologies of smartphones (with built-in digital
high-definition cameras) along with
Kodak and Polaroid were once market leaders in the resistance of Kodak and
the camera film and photography industry, with Polaroid to adapt to digital-photo
their innovative products. technology resulting in both these
companies downsizing their
operations and workforce, and
eventually failing.
 - SMM personnel may be required to
Developments in social monitor and respond to dissatisfied
media marketing customers who use social media

(SMM) platforms as powerful channels to

Created additional jobs and roles in organizations
as businesses face increasing pressures to
respond to changing customer needs and
expectations.
communicate with online
communities.
- SMM is used for social outreach as
well as through the line (TTL)
promotional strategies in order for
businesses to gain competitive
advantages.
The intensity of
competition in many - For example, many airlines
struggled during the COVID-19 era
markets also and made cost savings by switching
necessitates competitve full-time worker to part-time

prices. employoment contracts or

implementing staff redundancies to
This could result in some businesses having to reduce the size of their workforce.
delayer or even cut the size of its workforce in
order to remain competitive.

Growth and evolution
Growth and evolution of businesses (such as
mergers and acquisitions, hostile takeovers, or
joint ventures) may necessitate a change in
organizational structures. The larger a business
becomes, the more complicated its organizational
structure is likely to be.
- For example, as a business becomes a
multinational company (MNC) with
operations in many international
locations, it might need to adopt
organizational structures based on
geography rather than by function.
- It would be impractical to manage
MNCs without more formal structures
and delegation of authority.
- By contrast, a small sole trader
business might not even have a formal
organizational structure.
Crisis
Crises can also result in changes to
organizational structures due to the high risks
and uncertainties depending on the nature and
scale of the disasters.
- In recent times, the COVID-19
pandemic has affected almost
every aspect of modern life.
Being able to recognise the signs of the need for organizational change can
help leaders and managers to prepare for the change and to implement
appropriate strategies to ensure the survival and prosperity of the business.
Being proactive about change and its impacts (i.e., effective change
management) will put a business in a better position to deal with uncertainties
in the corporate world.
Case Study -
COVID-19 and the new
norm
In recent times, the COVID-19 pandemic
has affected almost every aspect of
modern life.

Watch this video from The Economist that

discusses the changes to the corporate
world due to the aftermath of COVID-19
across the globe. With changes to
traditional work patterns and
developments in mobile technologies,
remote working has become the "new
norm". Consider the appropriateness of
organizational structures given the
changes in the external factors featured
in the video by answering the questions
below.
Questions
1. Prior to COVID-19, 1 in 50 Americans worked full time from home. What is the rate now?
2. The concept of a modern working office emerged during which revolution?
3. Did the rise of the Internet change change the basic function of the workplace office?
4. How much do companies spend on office space for one employee a year, on average?
5. Which location has the most expensive prices for office spaces?
6. By how much could the COVID-19 pandemic reduce the number of staff in London offices?
7. Which social media company has authorized a permanent move to working from home for
its employees?
8. What is meant by "knowledge jobs"?
9. What percentage of people in Switzerland have the ability to work from home?
10. What are some of the challenges and opportunities of working from home for female
workers?