Essay on Sri Lankan Economic and Political Influences on Strategic Human Resource Management

Strategic Human Resource Management (SHRM) has become crucial in a time when globalisation forces businesses to grow internationally, especially for developing nations like Sri Lanka. Here, the political and economic climate offers special possibilities and challenges that affect how businesses maximise and manage their human resources. In order to comprehend the subtleties of SHRM in a developing nation environment, this blog looks at these issues via a strategic HR lens, backed by pertinent theories and frameworks.

(Photo by Supun D Hewage: https://www.pexels.com/photo/people-protesting-outside-a-building-12860493/)

The Economic Environment and SHR in Sri Lanka

For a developing country, Sri Lanka is subject to varying economic conditions, which have an immediate effect on worker dynamics, operational strategies, and organisational growth. Companies' human resource structures are influenced by resource limitations, foreign exchange restrictions, and skill shortages, which emphasises the significance of efficient SHR in coordinating corporate plans with financial realities (Barney, 1991).

Organisations gain a competitive edge by optimising the value of their internal resources, including human capital, according to the Resource-Based View (RBV) philosophy. Organisations must engage in staff development to promote creativity and resilience in Sri Lanka, where resources are frequently limited and competent personnel may be in short supply (Barney, 1991). During economic downturns, when businesses are motivated to use their current resources rather than spend money on hiring outside candidates, this strategy becomes even more crucial.

The Political Environment’s Impact on SHR

In Sri Lanka, political issues are also crucial in determining SHR tactics. Organisations' management of hiring, employee relations, and compliance may be impacted by frequent legislative changes and bureaucratic complications. For example, businesses must remain flexible and responsive to government laws pertaining to labour rights and minimum wage adjustments. Employee engagement and morale are significantly impacted by political stability—or lack thereof—and this frequently influences SHRM practices pertaining to motivation and retention (Morrison, 2006).

Political and cultural gaps can affect employee expectations and behaviour, according to Hofstede's Cultural Dimensions Theory. This is especially true in Sri Lanka, where businesses must modify their HR procedures to balance international norms with local values (Hofstede, 1980). Organisations can preserve employee harmony and compliance—two essential elements of effective SHRM in politically unstable environments—by adjusting to these sociopolitical quirks.

Integrating PESTEL Analysis for SHR in Sri Lanka

An organised method for examining the outside influences on Sri Lankan SHR policies is the PESTEL framework. A PESTEL study with an emphasis on SHR implications is provided below:

Applying SHR Theories to Employee Motivation and Retention

Understanding employee engagement and motivation is an important aspect of a strategic approach to human resource management in Sri Lanka, especially in light of the country's limited resources and differing socioeconomic expectations. Maslow's Hierarchy of Needs, Work and Job Design, and Employee Participation models are important theories that apply to SHR in Sri Lanka. These theories all work together to increase organisational productivity and employee satisfaction.

1. A strategic approach to human resource management in Sri Lanka must include an understanding of employee motivation and engagement, particularly given the nation's limited resources and varying socioeconomic expectations. Important theories that relate to SHR in Sri Lanka include Maslow's Hierarchy of Needs, Work and Job Design, and Employee Participation Models. Together, these theories boost employee satisfaction and organisational productivity.
   
   
2. Work & Job Design: Well-designed positions increase worker happiness and engagement, particularly when they complement personal goals and abilities. According to Hackman and Oldham's (1976) Job Characteristics Model, employee motivation is increased by activities that are rich in skill variation, task identity, and relevance. In Sri Lanka, where businesses frequently have to maximise output with constrained resources, this strategy works well. Developing engaged, high-performing employees need roles that are structured to offer autonomy and feedback (Hackman & Oldham, 1976).
   
   
3. Models of Employee Participation: Using models such as Representative Participation and the Upward Participating Method to involve employees in decision-making processes can boost morale and productivity. Employee involvement is consistent with Vroom's Expectancy Theory, which holds that workers are more likely to remain dedicated when they perceive a link between their work and the success of the company (Vroom, 1964). Participatory management can increase organisational commitment, lower turnover, and promote a mutually respectful culture in Sri Lanka, where customs place a strong emphasis on harmony among all members of the group.

Negotiation and Engagement in SHR

Effective engagement and negotiation are essential components of strategic human resource management, particularly in multicultural settings with varying political and economic demands. Given their emerging market status, Sri Lankan businesses must implement strong negotiating techniques to effectively manage labour relations, draw in foreign talent, and engage local staff. Organisations can handle employee problems while staying flexible and adaptable to changes in the market by using collective bargaining and open lines of communication.

Kurt Lewin's 1947 Change Management Model (Adapted from Tuffnell, 2021)

Kurt Lewin's 1947 Change Management Model provides support to the claim that open dialogue promotes a cooperative environment. The three steps of Lewin's model—unfreezing, altering, and refreezing—apply to situations in which Sri Lankan organisations experience swift changes in the economy or regulations. Employers can guarantee easier adaption and boost staff loyalty and morale by incorporating workers in these changes (Lewin, 1947).

Addressing the Global Context through Strategic Human Resourcing

Sri Lanka is a developing country, and its political and economic environment makes it difficult to comply with international HRM norms. However, the significance of striking a balance between local adaptation and standardisation in HR practices is highlighted by theories such as the Global Integration and Local Responsiveness (GILR) framework (Prahalad & Doz, 1987). Multinational corporations doing business in Sri Lanka, for instance, might apply international regulations while modifying hiring, training, and employee engagement procedures to fit the cultural norms of the country.

In the same way, utilising ideas such as Work-Life Balance and Employee Well-Being (Guest, 2002) can improve both employee happiness and organisational success. These procedures are in line with current SHRM trends, which emphasise the importance of mental health care and employee well-being in sustaining a resilient and driven workforce, especially in developing nations where workers are subject to additional socioeconomic challenges.

Conclusion

Like in many developing nations, strategic human resource management in Sri Lanka requires a proactive approach to overcoming political and economic obstacles. Organisations can improve employee motivation, satisfaction, and retention by using theories like Lewin's Change Management Model, Employee Participation Models, and Maslow's Hierarchy of Needs. HR managers may predict and reduce external risks by using the PESTEL framework, which guarantees that their SHR plans are sensitive to the particular socioeconomic circumstances of the nation.

In conclusion, Sri Lankan organisations are able to not only endure but also flourish in a demanding environment when HR policies are well matched with external circumstances. In order to build robust HR frameworks that support long-term employee happiness and sustainable organisational growth, HR professionals must keep innovating and adapting.

References

Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management, 17(1), 99–120.

Guest, D. E. (2002). Human resource management, corporate performance and employee wellbeing: Building the worker into HRM. The Journal of Industrial Relations, 44(3), 335-358.

Hackman, J. R., & Oldham, G. R. (1976). Motivation through the design of work: Test of a theory. Organizational Behavior and Human Performance, 16(2), 250–279.

Hofstede, G. (1980). Culture’s Consequences: International Differences in Work-Related Values. Sage.

Lewin, K. (1947). Frontiers in group dynamics. Human Relations, 1(2), 143–153.

Maslow, A. H. (1943). A theory of human motivation. Psychological Review, 50(4), 370–396.

Morrison, E. W. (2006). Doing the Job Well: An Internal vs External Motivation Perspective. Journal of Applied Psychology, 75, 48-56.

Prahalad, C.K., & Doz, Y.L. (1987). The Multinational Mission: Balancing Local Demands and Global Vision. Free Press.

Vroom, V. H. (1964). Work and Motivation. John Wiley & Sons.

Tuffnell, C. (2021). Faculty learning communities: Supporting the development of online educators. Studies in Technology Enhanced Learning.