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Chapter 2 : Context of Human Resource Management

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External and internal environment impacting HR functions

Learning Objectives

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Environment may be understood as all those forces which have their bearing on the functioning of HR department

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Forces are Context of HRM

General Specific

•Political- Legal•Economic•Technological•Socio-Cultural forces

•Customers •Suppliers•Competitors•Unions

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Legislature, executive , judiciary ,

Article 14: equality before lawArticle 15: no discriminationArticle 23: no forced labourProhibition of child labour, equal wage act, factor act,

maternity leave , workmen compensation, provident fund, gratuity act etc…

Influences recruitment, placement, training, Employee- relations

Political –Legal

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Economic forces – income level, purchasing power, savings, debts, literacy, health, male/female ratio, population mix etc

All these influences quality of labor which in turn impacts productivity

Economics

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Tendency of firms to extend their sales , ownership and manufacturing to newer markets abroad

Worldwide company culture

Worldwide recruiting

Global alliance needs highly trained and devoted staff

Deal with virtual workforce

Outsourcing

Globalization & implications of global economy

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Technology plays a vital role in HR functions, in order to make people more intellectual and efficient.

Managing well knowledgeable people - incentives, WLB, Flexi time, profit sharing

HRIS: managing a virtual workforce

managing employee alienation

training & retraining employees to manage obsolescence.

providing work life balance Ex: bank installed special software that made CSR to handle customer’s

inquiries. Seeking to capitalize on new software, bank upgraded CSR jobs.; gave training , how to sell other services and thereby improved, profitability. Other bank didn’t ; just system helped service rep. Handle few more calls

Technology

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• Culture refers to the complex whole which includes knowledge, belief, art Morales, laws, customs and other capabilities and habits acquired by an Individual as a member of society.

Eg: Tata and L& T Tata’s culture – “Hire the right people and let them free” L & T’s culture – “ They are known for their professional approach

• Culture indicates attitude of workers towards work• Time dimensions which influence HRM (past, present, future)• Achievement oriented, effort-reward• Individualistic or collectivism

Socio- Cultural – influence behaviour of employees

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Suppliers – For HR dept, suppliers are those who provide human Resources to an organization. Ex: Consulting firms, training institutes.

Competitors – Competition plays significant role in HR function and Activities. Organization need to groom its employees through well managed HR planning programmes to withstand competition

Customers – Customers have their own influence on companies personal Functions . So everybody in the orgn must endeavour to offer products which gives satisfaction for the money customers pay.

Specific environment

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UnionsA firm’s personal activities will be influenced by it’s own

union’s as well as the union’s of other plants.

A trade union may be understood as association of workers or management formed to protect their own individual interest.

All HR activities like recruitment, selection, training, compensation are carried out in consultation with union leaders. Eg : The Bokaro steel plant has 68 trade unions. Calcutta Corporation has about 100 trade unions.

Specific environment

Scanning the Environment

1/6/2012Human Resource Management (MM ZC441)12

• Involves surveillance of the environment to determine trends and projections that would affect the fortunes of the organization.

• Focuses on the specific environment• Provides relevant information for planning

and decision making• The relevant areas for HRM to be scanned

are labor market, legal environment, constitutional provisions and technology

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• The HRM environment comprises of both external and internal forces

• The external environment consists of political-legal, economic, technological and cultural factors (PEST)

• The internal environment consists of unions, suppliers, customers , competitors and professional bodies.

• The study of environment enables HR experts to become proactive in their approach to personnel aspects

Summary of Chapter