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ENVIRONMENT & HUMAN

RESOURCE MANAGEMENT

By

Prabhashini Wijewantha

Session Outline

What is Business Environment?

Approaches to study the relationship between

Environment & HRM

Stakeholders

External Environment

Challenges to HRM from the Environment

What is Business Environment?What is Business Environment?What is Business Environment?What is Business Environment?

Those factors and forces inside andoutside the organization that affect the

organizations performance.

Approaches to study the relationshipApproaches to study the relationshipApproaches to study the relationshipApproaches to study the relationship

between Environment & HRMbetween Environment & HRMbetween Environment & HRMbetween Environment & HRM

Understanding and analyzing the actors andforces in the Internal and External Environmentof the organization from a HRM perspective.

Exploring the challenges to the organization

and the HRM function

Stakeholders

Any constituencies in the organizationsenvironment that are affected by the

organizations decisions and actions

Organizational StakeholdersOrganizational StakeholdersOrganizational StakeholdersOrganizational Stakeholders

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External Environment

DemographicDemographic

TechnologicalTechnological

CulturalCultural EconomicEconomic

PoliticalPolitical NaturalNatural

Forces that ShapeOpportunities

and Pose Threats

to a Company

Forces that ShapeOpportunities

and Pose Threats

to a Company

Challenges to HRM from theChallenges to HRM from theChallenges to HRM from theChallenges to HRM from the

EnvironmentEnvironmentEnvironmentEnvironment

Globalization Managing Change

DevelopingHuman Capital

Cost Containment

Market Responsiveness

Technology

Globalization

Trend toward opening up foreign markets to

international trade and investment

Technology

Manual Labor to Knowledge Workers

Implementation of Human Resource InformationSystems

Change

Trend toward opening up foreign markets tointernational trade and investment.

Reactive change

Change that occurs after external forces have already

affected performance

Proactive change

Change initiated to take advantage of targeted

opportunities

Managing Talent, or HumanManaging Talent, or HumanManaging Talent, or HumanManaging Talent, or Human

CapitalCapitalCapitalCapital

The knowledge, skills, and capabilities ofindividuals that have economic value to an

organization.

Valuable because capital:

is based on company-specific skills.

is gained through long-term experience.

can be expanded through development.

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Responding to the Market

Total Quality Management (TQM)

A set of principles and practices whose core ideasinclude understanding customer needs, doing

things right the first time, and striving for

continuous improvement.

Six Sigma

A process used to translate customer needs into aset of optimal tasks that are performed in concert

with one another.

Responding to the Market

Reengineering and HRMFundamental rethinking and radical redesign of business

processes to achieve dramatic improvements in cost,

quality, service, and speed.

Requires that managers create an environment forchange.

Depends on effective leadership and communicationprocesses.

Requires that administrative systems be reviewed andmodified.

Containing Cost

Downsizing

The planned elimination of jobs (head count).

Layoffs

Outsourcing

Contracting outside the organization to have workdone that formerly was done by internal employees.

Off-shoring

The business practice of sending jobs to othercountries.

Containing Cost

Employee Leasing

The process of dismissing employees who are thenhired by a leasing company (which handles all HR-

related activities) and contracting with that

company to lease back the employees

Cultural Changes

Demographic Changes

Diversity Changes

Changing attitudes towards work

Balancing work and family

Questions for Discussion