HRM Environments (internal and external)
- 2. HRM environment An HRM environment comprises of many elements which are both inside and outside the organization. In a rapid changing society, organizations present challenges that require early solutions. In order to have an effective HR program, managers give careful attention to all these challenges. A HRM manager balances with the needs of the organization and the realities of the internal and external environments. Some environment factors which have significant implications on HRM environment are the decreasing trend of availability of middle-managers, unemployment, education and skills gap, the adoption of advanced technology. 2
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- 4. Internal Environment These are the internal forces or factors which have influence on HR activities of the organization. Some of these factors are: organizational culture and conflict, organizational climate. 4
- 5. Organizational Culture and Conflict Each organization has its own culture that differentiates one organization from another. Organization culture reflects the past and shapes the future. It is the product of all organization features – its people, its past, its successes and its failures. Few core values or beliefs shape its culture. Thus, culture is sharing of some core values or beliefs by the members of the organization. There is often conflict between organizational culture and employee’s attitude. Individuals have personality, organizations have cultures. Conflict usually surfaces because of dualities such as – personal goal v/s organizational goal, discipline v/s autonomy, rights v/s duties, self confidence v/s arrogance, participation v/s isolation. Such conflicts have their bearings on HR activities in an organization. 5
- 6. Organizational climate Organizational climate refers to the prevailing atmosphere that exists in an organization and its impact on employees. Organizations can be friendly or unfriendly, open or secretive, rigid or flexible, innovative or not. The major factors influencing the climate are leadership and communication style. It is reflected in the level of employee motivation, job satisfaction, performance, and productivity, and thus has a direct impact on organizational profits. HR managers play a key role in helping line managers throughout the organization to establish and maintain a positive organizational climate. 6
- 7. External Environment These are the forces external to an organization and have influence on HR functions. The external environment of HRM consists of Government regulations, economic conditions, labour market, technological advancement and diversity. 7
- 8. Government Regulations Introduction of new workplace compliance standards has compelled HR department to be under constant pressure to stay within the law. These regulations influence every process of the HR department, including hiring, training, compensation and termination. Violations of such regulations can lead to extensive fine or to the closure of company. 8
- 9. Economic Conditions One of the external influences is the shape of economy. It may affect the talent pool or it might affect the ability to hire anyone at all. The best way to prepare against adverse economic conditions is to know what’s happening in the world around you and subsequently create a plan for when there is an economic recession. 9
- 10. Labour Market It is the geographic area from where a firm recruits employees. The labour market is often different for various employee groups within an organization. While clerical and technical employees are generally hired locally, senior managers and highly specialized employees are hired often nationally or even internationally. The labour market affects role of HR as it is untailored and often uncertain. 10
- 11. Technological Advancements Technological advancement is considered an external influence to the organization. HR department tends to become more upgraded, more challenging, employees become more skilled and knowledgeable. HR should be ready to deal with the technology. 11
- 12. Diversity Workforce of any organization comprises of people from different nations. People belonging to different cultures, races, religions, gender work together in an organization. HR managers must learn to live with these diverse behaviors. Diversity if managed properly, can increase creativity and innovation in the firms, decision making can also be improved which is very essential for effective working of an organization. 12
- 13. HR Managers make sure that every type of external influence is listened to and proper procedures are followed 13
- 14. Strategic HRM Before explaining the meaning of strategic HRM, first define the terms strategy and strategic management. 14
- 15. Strategy is associated with the long-term decisions taken at the top of the enterprise. The term strategy is frequently being used in the present-day corporate world. It envisages thinking ahead to survive and grow in a highly competitive environment. Strategy is concerned with determining which option will provide maximum benefits. Strategic management is the process of formulating, implementing and evaluating business strategies to achieve organizational objectives. 15
- 16. Strategic human resource management refers to the process of developing practices, programs and policies that help achieve organizational objectives. These practices, programs and policies need to be aligned with organizational strategies. The study of strategic management, therefore, emphasizes monitoring and evaluating environmental opportunities and threats in the light of an organization's strengths and weaknesses. 16
- 17. Strategic human resource management considers the implications of business strategy for all HR systems within the organization by translating organization's objectives into specific people management systems. The specific approach applied and process utilized will vary from organization to organization. The study of strategic management, therefore, lays importance on monitoring and evaluating environmental opportunities and threats in the light of a organization's strengths and weaknesses. Thus, strategic HRM means a strategic look at HR functions in line with the business functions of an organization. 17
- 18. Strategic HRM concerned with the following: Analyze the opportunities and threats existing in the external environment. Formulate strategies that will match the organization's (internal) strengths and weaknesses with environmental (external) threats and opportunities. In other words, make a SWOT analysis of organization. Implement the strategies so formulated. Evaluate and control activities to ensure that organization's objectives are duly achieved. 18