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Environment of Human

Resource Management

Chapter 2
Environment of HRM

 Is an important variable in the HRM Model

 Is nothing but all those forces which have their

bearing on the functioning of the HR Dept.

 Environment : Useful for HR managers to be

proactive and not reactive in today’s world of
change and competition
Environment of HRM

External :
1.Political and Legal

Internal :
2.Organisational Culture and Conflict
3.Professional Bodies
External Forces
 1. Political and Legal: In a democratic set up
there are three institutions which constitute the
political environment
 a.Legislature, b.Executive and c.Judiciary

a. Legislature : The parliament at the Center

and Assembly at the state level
b.Executive : is the Government- the law
implementation body.
c.Judiciary : Watchdog to see if both function
in confines of the constitution.
External Forces
 2. Economic :
 All economic forces which have bearing
over HR functions. Growth, Strategy,
industrial production, agriculture,
population, national and per capita income,
money and capital markets, suppliers,
competitors, customers, and industrial
External Forces
 a.Suppliers : those who provide human
resources to the organisation- Employment
Exchange, Universities, Colleges, training
institutes, consulting firms, labour contractors,
competitors. The type of employees the
organisation employs depend on the suppliers.

 b.Competitors : as number of organisations

competing for HR increases, so does importance
of staffing ,appraisal and compensation activities.
External Forces
 c.Customers : influences company’s personnel
functions. Customers need high quality products
at the reasonable price. Organisations have to
offer products which will result in customer
delight. Sales are affected by product quality
which is directly related to the skills and
knowledge of the employees.

 d.Industrial Labour : Changes – Commitment

to industry, Protective Legislation, Economic and
Social Status, Employment Pattern ,Unionisation
External Forces
 e.Globalisation : has considerable
influence on HR functions. Employee
hiring, training, motivation, compensation
and retaining are guided by the global
perspective. Execute company’s strategy
on a global scale.
External Forces
 3.Technological : Systematic application of
organised knowledge or practical tasks.

 Jobs become more intellectual

 Dislocate workers unless they become well
equipped to work on new machines
 Acquainted workers find the job challenging
and rewarding.
 Impacts human relations- processes decide who
will be close to whom.
 Job holders become highly professionalised and
External Forces
 4.Culture : is complex whole of knowledge,
belief, art, morals, laws, customs and other
capabilities and habits acquired by individuals as
members of the society.

 Culture creates the type of people who become

members of the organisation. Tata’s, Birlas,
 Attitude of the workers is a result of the cultures.
 Time orientation – roots in culture, British-
discipline, Japan-futuristic
 Work ethics, achievement needs and effort
reward expectation – are results of culture.
Internal Forces
 1. Unions : Organisations practices are
influenced by its own Unions.

 2. Culture and Conflict : Culture is product of

organisations features- people, its success and
failure. A few values and beliefs shape its
 Tata: Get the best people and set them free
 L&T : Professionalism
 Reliance : Competitive spirit
 IBM: service
 GM : product innovations
Internal Forces
 Often there is conflict between
organisational culture and employees
Conflict arises due to…….
 Personal goal vs organisational goals
 Personal ethics vs Organisational ethics
 Rights vs duties
 Obedience vs self respect
 Discipline vs autonomy
 Self-confidence vs arrogance
 Actualisation vs aggrandisement
 Authority vs accountability
Internal Forces
 Leadership vs followership
 Delegation vs abdication
 Participation vs anarchy
 Feedback vs abuse
 Cleverness vs wisdom
 Grooming vs pampering
 Doing vs becoming
 Material benefit vs spiritual loss
 Change vs stability
 Greed vs renunciation
 Short term vs long term
Internal Forces
 3.Professional Bodies

NIPM : supply of academic inputs, courses

etc., code of ethics for HR professionals

 Organisational Scanning
Individual Assignment
 Globalisation and its impact on Human Resource
 Performance Appraisal – an effective tool to
measure employee effectiveness.
 Future of Human Resource Management in India
 Training leads to development
 Managing employee hiring in the competitive
 Human Resource Management in IT Companies