Human resources environment

HUMAN RESOURCES
ENVIRONMENT
CHAPTER-2

HUMAN RESOURCES
ENVIRONMENT
 After developing investment prospective for making
strategic decision about human resources managers need
to scan the environment before formulating strategy.
 Technology has massive impact on the organizational
environment requiring technically qualified employees to
run the operations. During these days of rapid changes
,the process of formulating strategies & planning and their
implementation is more difficult but important.
 Organizations which scanned the environment ,
developed right strategies and planed alternatives for
dealing with changing conditions , were successful
comparative to those who ignored these important factors.

 The framework for scanning the environment
is composed of the following categories:
Technology .
Organizational structure.
Values & attitudinal trend of employees.
Managerial trends.
Demographic trends.
HR utilization trends.
International developments impacting
organization.

TECHNOLOGY AND
ORGANIZATIONAL STRUCTURE
 BROAD INFLUENCES TECHNOLOGY
 Technology particularly information technology is
having a major impact or the structure of
organizations and the nature of managerial work.
 Major areas of business , manufacturing , sales,
finance, supply chain management and human
resources have integrated through company’s
software systems.
 The information technology has enabled
companies to gain numerous benefits like
efficiency gains, quicker response time, better
inventory management, enhanced coordination
and improved decision making.

CONT…
 Managers to be effective in such an environment
requires special skills as the nature of
managerial assignment has changed. Lean and
flat organizations, alternative job assignments
and opportunities are needed for development of
effective managers for future needs.
 The use of technology has changed the hierarchal
structure of the organizations as physical
supervision need has been reduced.
 Technology has also reduced work process cycle
time. Changes in the work processes and design
warrants well planned training and development
programs to ensure availability of employees
with updated skills.

TECHNOLOGY AND ORGANIZATIONAL
STRUCTURE
 Influence of HRIS.Influence of HRIS.
 The organizations have heavily invested in acquisition of fast and
reliable software's ( People soft, HRIS. SAP, JD Edward, MRP, Oracle
etc) for different operations including HR information system, which
provide facility of automatic human resources processes and immediate
information to decision makers.
 Redeployment of HR Staff to operating Units.Redeployment of HR Staff to operating Units.
 HR staff now part of operating units rather than centralized HR
department. This has been done to provide spontaneous HR support to
operating units.
 HR as business partners
 New organization structure.New organization structure.
 Due to advance technology, the distinction between management and
labour have become blurred. workers are becoming more responsible
and accountable as job owners, making decisions at their level;
 Task forces , more flexible work arrangements, project teams have
replaced normal manager employee hierarchal relationship.

TECHNOLOGY AND
ORGANIZATIONAL STRUCTURE
 All structural changes on account of technological changes are focused to
enhance organizational ability to coupe up with the current & future
challenges. There are four new structural forms of interest:
Unbundled corporations.Unbundled corporations.
Autonomous business unit functions as profit centers.
Traditional support services are outsourced.
 Network organizations or virtual corporations.Network organizations or virtual corporations.
Organizations which are similar to unbundled corporations.
One of the driving force for creating such network
organizations is the need to outsource activities that other
companies , consultants, or joint venture partners can
perform better or more quickly or at reduced cost.

TECHNOLOGY AND ORGANIZATIONAL
STRUCTURE
 Cellular organizations.Cellular organizations.
 This structural form organizations are typically groups of small technology oriented
companies that maintain affiliations over time.
 Employees of these companies are mostly technical professionals to take various
projects.
 Managerial needs for such organizations is technical knowledge, cross functional
experience, international exposure, collaborative, leadership and self management
skills.
 Respondent organizations.Respondent organizations.
 In this structural form, organization is essentially an entrepreneurial corporation that
exist by filling niches (positions) to supply customized services to unbundled
corporations.
 in such corporations decision making is quick and is likely to be retained at the level
of central entrepreneurial level.
 These corporations are risky and have high failure rate.
 The positive aspect is that employees in such set up have more opportunities to learn
new skills and develop as generalist.
 Stimulus for entrepreneurial business is technical knowledge of those managers who
can manage a small set up of their own and provide organizations required services/
components / spares at economical price with guarantee of desired quality level.

VALUES & ATTITUDINAL TREND
OF EMPLOYEES.
Values .
Principles, standards, morale , ethics, concepts ,
beliefs that guide how we make decisions about
and evaluations of behaviours and events .
Basic conviction that a specific mode or end
state of existence is personally or socially
preferable to an opposite or converse mode of
conduct or end state of existence.
Attitudes.
Positive or negative feelings concerning
objects, people, or events.
Attitudes are less stable than values.

VALUES & ATTITUDINAL TREND OF
EMPLOYEES.
 Work ethics may vary over time and places. Older people
believe that things were better or at least more moral,
more decent, when they were young.
 There has been some shifts in work values of importance
to strategic management . The Most important of these
are values & attitudes of employees towards their
employers.
 It is important to understand these values and attitudes to
understand future human resources environment.
 Interest and capability of employees for learning new
skills to face challenges of change, flexibility to adjust to
changed environment have significant impact on
organizational work environment.

IMPACT OF MANAGEMENT TRENDS
ON HUMAN RESOURCES
Management of diversity.
Effective management of diversity can be supportive to
enhance productivity / efficiency and through this
organizations can gain competitive advantage.
Work teams.
Work teams have been of increasing interest to managers.
Benefits include improved decision making, improved
performance, improved quality, increased flexibility, reduced
labour cost, lower employee turnover, greater service
efficiency, facilitative for change , shorter product cycle time.
Virtual teams.
Members from different functions work together from different
locations, different countries, different time zones, through
teleconferences, webex, net meetings etc.

MANAGEMENT TRENDS
HR outsourcing.
Most significant forces affecting HR functions are
outsourcing of HR function..
This is result of several strategic and operational
influences..
This is intended to have greater efficiency, better
service and less response time and cost effectiveness.
Open book management.
The practice of sharing financial and performance
information is known as open book management.
The reason for this is the belief that empowered
employees can make informed decisions.

MANAGEMENT TRENDS Total quality management.
 A continuing trend of importance to management strategists is Total
Quality Management pioneered by Edward Deming which is a broad based
systematic approach for achieving high level of quality and required to
survive against the pressure of world class competition.
 TQM emphasized:
 Articulation of strategic vision.
 Objectives and accurate measurement.
 Benchmarking.
 Employees empowerment and team building.
 Striving for continuous improvement.
 Conceptualize quality related activities.
 Leadership commitment to quality.
 Emphasis on customer satisfaction.

CONT…
 TQM emphasizes on training, which makes it
important from HRM prospective as well.
 Aim of TQM is to add value to all stake holders
in every activity, which is necessary to make
company more efficient and increase
productivity.

MANAGEMENT TRENDS
Integrated manufacturing.
Integrated manufacturing systems provide a new
approach for streamlined manufacturing, which are
composed of advanced manufacturing technology,
just in time inventory and other technological
resources.
When these technologies and managerial systems
are combined , integrated manufacturing systems
have the potential to provide greater dissemination
of information, remove barriers related to
functional specialization, promote collaboration to
solve quality problems etc.
These systems require knowledge workers and their
technical and problem solving skills are advanced
to make them more effective at their jobs.

MANAGEMENT TRENDS
 Reengineering.
Also known as process innovation, core processes redesign
and business processes reengineering is practiced since 1980s .
Reengineering requires cross functional coordination and
crossing of organizational boundaries .
because it may disrupt existing power relationship and
Some senior executives are still not convinced of the ultimate
value of reengineering due to their concerns about long range
human impacts due to elimination of l jobs.

MANAGEMENT TRENDS
 Management of professionals.
 Professional requires different form of management. They
often have low organizational loyality, require substatial
autonomy, follow their own professional code of ethics and
standards.
 HR problem for the future will be to provide career path for
professionals.

MANAGEMENT TRENDS
Demographic trends –major challenges.
Aging workforce, .
Racial diversity .
Greater feminization of the workforce.
Labour shortages-scarcity of skilled , needed labour force.
Support services like child care for dual career couples.

TRENDS IN UTILIZATION OF
HUMAN RESOURCES
 Telecommuting.-telecommunication.Telecommuting.-telecommunication.
Remote working / working from home / beneficial, cost
effective , no Geographical relocation and travel expense.
 Relocation of work-decentralized .Relocation of work-decentralized .
Allowed migration of workers from cities to small towns /
rural areas.
Companies are also relocating their operations.
 Growing use of temporary and contingentGrowing use of temporary and contingent
workersworkers.
 Factors contributing to use of temps / contingent workers-advantages,
low cost, responsibility / liability shift..
 Factors limiting the use of temps / contingent workers-disadvantages,
training, loyalty,
 Employee leasing-existing employees are leased to external supplier.


INTERNATIONAL DEVELOPMENTS
 Global competition.
 Global sourcing.
 North American Free Trade Agreement
(NAFTA) –across boundaries
 European community.

21
IMPORTANCE OF
INTERNATIONAL BUSINESS
(GLOBAL)
If you are not thinking
international,
you are not thinking business
management

22
AND
INTERNATIONAL
MANAGERS
 Difficulties Operating in Borderless World
 Challenges
 Economic
 Legal-political
 Socio-cultural
 Multinational Corporations
 Foreign Markets - Entrance

23
A BORDERLESS WORLD
 Business is becoming a unified, global field
 Companies that think globally have a
competitive edge
 Domestic markets are saturated for many
companies
 Consumers can no longer tell from which country
they are buying

24
FOUR STAGES OF GLOBALIZATION
Domestic stage:
market potential is limited to the home country
production and marketing facilities located at home
International stage:
exports increase
company usually adopts a multi-domestic approach
Multinational stage:
marketing and production facilities located in many
countries
more than 1/3 of its sales outside the home country
Global (or stateless) stage:
making sales and acquiring resources in whatever country
offers the best opportunities and lowest cost
ownership, control, and top management tend to be
dispersed

25
GLOBAL (STATELESS)
CORPORATIONS
 Number is increasing
 Awareness of national borders decreasing
 Rising managers expected to know a 2nd
or 3rd
language
 Corporate Example – Nestle (Swiss)
 CEO Peter Brabeck–Letmathe (Austrian)
 Half of general managers (non-Swiss)
 Strong faith in regional managers who are native to the
region

26
THE INTERNATIONAL
BUSINESS ENVIRONMENT
 International management is management of
business operations conducted in more than one
country
 Fundamental tasks do not change
 Basic management functions
 are the same - domestic or international
 Greater difficulties and risks when performing on an
international scale

27
INTERNATIONAL ENVIRONMENT
FACTORS
Organization
Economic
•Economic
development
•Infrastructure
•Resource and
product markets
•Per capita Income
•Exchange rates
•Economic conditions
Legal-Political
•Political risk
•Government takeovers
•Tariffs, quotas, taxes
•Terrorism, political instability
•Laws, regulations
Sociocultural
•Socio values, beliefs
•Language
•Religion (objects, taboos, holidays)
•Kinship patterns
•Formal education, literary
•

28
ECONOMIC ENVIRONMENT
FACTORS
 Economic development
 Infrastructure
 Resource and product markets
 Exchange rates
 Inflation
 Interest rates
 Economic growth

31
WTO
 Goal, is to guide and sometimes urge the
nations of the world toward free trade and
open markets
 Encompasses GATT and all of its
agreements
 Has legal authority to arbitrate disputes on
400 trade issues
 Partly responsible for backlash against
global trade

32
NORTH AMERICAN FREE TRADE
AGREEMENT
1.Went into effect on January 1, 1994
2. Merged the United States, Canada, and Mexico
with more that 421 million consumers
3. Breaks down tariffs and trade restrictions on most
agriculture and manufactured products
4. August 12, 1992 agreements in number of key
areas include: agriculture, autos, transport, &
intellectual property
5. January, 2004 -10th
anniversary = success and
failure

What’s Labour Laws?What’s Labour Laws?
 Labour law or employment law is the body of laws,
regulations, administrative rulings, and precedents which
address the legal rights of, and restrictions on, labourers and
their organizations.
I t deals with many aspects of relationship between trade
unions, employers and their employees.
 The final goal of Labour laws is to reduce the differences
between the Employer and Employee which leads in
Industrial Growth and Growth of a Nation.

Overview of Labour Laws in IndiaOverview of Labour Laws in India
 Under the Constitution of India, Labour is a subject in the
Concurrent List where both the Central and State Governments
are competent to enact legislation.
 As per the Constitution of India, matters in labour law contained
in Concurrent List are:
• Entry No. 22: Trade Unions, industrialists and labour disputes.
• Entry No. 23: Social Security and insurance, employment and
unemployment
• Entry No. 24: Welfare of labour

Human resources environment

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