1. HRM IN A DYNAMIC
ENVIRONMENT
EXCEL BOOKS
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3
Chapter
2. HRM In A Dynamic Environment
ANNOTATED OUTLINE
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INTRODUCTION
Organisations are open systems and are, therefore, influenced by
the environment (internal as well as external ) in which they operate.
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External and internal factors influencing
the Personnel function
External factors Internal factors
Technological factors Mission
Economic challenges Policies
Political factors Organisational culture
Social factors Organisation structure
Local and Governmental issues HR systems
Unions
Employers’ demands
Workforce diversity
4. HRM In A Dynamic Environment
Technological Changes And HRM
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Technology includes tools, machinery, equipment, work procedures
and employee knowledge and skills. The impact of technology on HR
can be profound, as the following things clearly reveal:
New skills, knowledge, experience and expertise required to gain
the edge over rivals.
Downsize operations, cut organisational layers and cut the extra
fat to survive in a competitive world
Collaborate and achieve teamwork
Relocate work from the office to the home
Internet and intranet revolution
5. HRM In A Dynamic Environment
How to deal with a human resource
surplus situation?
3-5
Why?
Automation
Restructuring
Mergers
Acquisitions
Competitive
Pressures
Consequences?
Cuts payroll expenses
Eliminates extra layers
Improves functioning if
firm’s product and
service profile is good
Shocks those left out
Shattering impact on
employee motivation
and morale if not managed
properly
Managing Survivors of
downsizing
Bitterness, anger, disbelief
and shock need to be handled
properly
Give information as to why
the action had to be taken
Tell how it is going to help
the firm and employees in
the long run.
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Role of HR in a virtual organisation
A virtual organisation is a network of companies or employees
connected by computers. Virtual workers work from home, hotels,
their cars, or wherever their work takes them. The human resource
function plays a unique role in a virtual organisation:
Psychological fit: The lack of face-to-face interaction in a virtual
organisation, virtually compels HR professionals to determine the
psychological fit between different units initially.
System alignment: Given the lack of physical proximity, it
becomes even more critical that the organisation's mission, vision and
measures be aligned and that all parties are familiar with these
issues; the HR function can play an important role in this task.
Reconsider rewards: In a virtual unit, very few permanent
positions exist. In many cases, the organisation will be staffed with
workers having different motivational forces. So rewarding each
entity in an effective way becomes an important job.
Cont…
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Reconsider staffing needs: In a virtual organisation, most
employees work on a contractual basis. Finding people with
requisite skills, knowledge and motivation levels becomes an
important activity.
Build partnerships: Virtual, teams have to be built from scratch
paying attention to their unique requirements. The concept of
employment needs to be replaced by the concept of 'partnership'
especially when most tend to work independently away from the
permanent employees or owners of the organisation
Develop leaders: Leaders become the major forces for building
trust, creating a mission and instilling a sense of belonging to the
organisation. HR can play a major role in ensuring that leaders
assume these responsibilities and meet them in an effective way.
Role of HR in a virtual organisation
8. HRM In A Dynamic Environment
Total Quality Management
Programmes
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TQM is a way of creating an organisational culture committed to the
continuous improvement of skills, teamwork, processes, product and
service quality and customer satisfaction.
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TQM: The main ideas
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Do it right the first time
Be customer oriented
Make continuous improvement a way of life
Build teamwork
Empower people
Create a climate of trust, an atmosphere for innovation
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Total Quality HR Approach
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The Total Quality HR Approach is all about employee participation
and empowerment, carried out in a sincere and wholehearted
manner. Rewards are designed to meet employee needs.
Employees are treated like customers. 360 degree appraisals are
carried out before picking up the best performing teams. Small
ideas and improvements are encouraged.
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Quality snaps of Indian companies
Name of Company Efforts toward TQM
1. Indo-Gulf Fertilizers Ltd Upgrading technology; training people; monitoring cost, quality
and delivery criteria; participative management, HRD; ISO 9002
Certification, first fertilizer company to get this in India;
Shaktiman Krishi Seva Kendras in UP, Bihar and West Bengal.
2. Bharat Heavy Electricals Ltd First to get ISO 9001 certification, in Dec 93; Strict metal parts
(BHEL) quality control; 100% checking of insulators for testing their
strength; strict quality assurance tests; high quality testing labs,
etc.
3. TELCO (Lucknow) SUMO model Jeeps manufactured here according highest
priority to ISO 9000 certifications; training and self-inspection
given top priority.
4. Philips India Ltd Implemented TQM in 1995; first step was moving toward
international quality system standards ISO 9000; total employee
involvement; creation of self managing mini, micro and mega-
teams; got the European Quality Award; Kaizen and suggestion
schemes introduced followed by rewards and recognition
system; regular surveys of employee motivation levels
accompanied by customer surveys
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Benchmarking
Effective implementation of TQM requires benchmarking. The
essence of benchmarking is striving to be the best of the best in one’s
area of operations. It is a continuous process of measuring products,
services and practices against the toughest competitors or industry
leaders with the aim of mutual improvement.
Reengineering
The primary focus of TQM is on continuous improvement or ongoing
incremental change. Reengineering is all about achieving this.
Actually speaking, reengineering takes place when more than 70 per
cent of the work processes in an organisation are evaluated and
altered. The focus is on simplifying operations and making them more
efficient and customer oriented.
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Essentials of reengineering
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Give people a mission; a clear view of how to achieve that mission.
Either serve the customer superbly or don’t even try.
Change is the way of life. It is not a process, it is a value.
Technology is never really a problem. The problem is how to use
technology effectively.
The wrong answer rarely kills you. What it does is waste time.
The weak link in reengineering is will.
Once people catch on to reengineering, you can’t hold them back. It’s a
lifetime opportunity.
In India TELCO, TISCO, L&T, Ranbaxy and Crompton Greaves have
successfully brought about radical changes through Reengineering.
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Flexible Manufacturing systems
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It is the integration of computer aided design, engineering and
manufacturing to produce low volume products at mass production
costs. In such a scenario, employees need to acquire skills and get
trained constantly. One should be capable of handle a variety of
tasks.
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Economic, Political And Social
Challenges And HR
Now-a-days, people, goods, capital and information are moving
around the globe as never before. Global competition is making
every firm to think in terms of gaining an edge over rivals by
producing high quality goods at a very competitive price. This is
where the ‘people’ dimension comes into being. Incentives,
favourable work climate, team spirit, freedom to think and act
independently, and a host of other HR initiatives are needed to
keep talent from flying away.
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What HR managers can do ?
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Use workforce skills and abilities in order to exploit environmental opportunities and
neutralise threats.
Employ innovative reward plans that recognise employee contributions and grant
enhancements.
Indulge in continuous quality improvement through TQM and HR contributions
(training, development, counselling, coaching etc.).
Utilise people with distinctive capabilities to create unsurpassed competence in
an area (Xerox in photocopier, 3M in adhesives, Telco in trucks, Britannia in
biscuits, Nestle in coffee, McDonald’s in fast foods, etc.).
Decentralise operations and rely on self managed teams to deliver goods in difficult
times (Motorola is famous for short product development cycles. It has quickly
commercialised ideas from its research labs).
Lay off workers in a smooth way, explaining facts (IBM, Kodak, Xerox, AT&T,
Steel and Textile firms in India etc.) to unions, workers and other affected groups.
HR generally plays a key role, these days, in planning and implementing corporate
downsizings, and then in maintaining the morale of the remaining employees.
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Political factors
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Political stability
Formation of new political parties
Influence of politicians over Productivity linked wage agreements
Political parties sympathetic to trade unionism
Opposition to VRS schemes, downsizing operations, restructuring
exercises.
Freedom to show the door to unwanted people
Social factors
Conducting business in a socially relevant and responsible way.
Hire qualified people or hire inexperienced local people and train them
to avoid trouble?
Helping economically poor people, unemployed, underprivileged ones,
etc.
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Local and government-related
factors
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Meet legislative requirements
Offering jobs to certain sections of local community
Trade unions
Demands for higher wages, better working conditions, incentives,
benefits, services
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MANAGING WORKFORCE DIVERSITY
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The workforce is becoming increasingly diverse now and
organisations are doing their best to address employee concerns and
to maximise benefits of different kind to employees with diverse
educational, cultural and religious backgrounds. The diversity issues,
mainly, include the following:
Composition
In terms of age, caste, education, culture, region, religion
Minority groups
Economically backward groups
Displaced persons
Child labour
Contract labour
Women employees
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Ways to cheer up women employees
Provide alternative career paths
Offer extended leave facilities so that they can meet their pressing
commitments according to their convenience
Allow female workers to create their own schedules and process
work at home
Create flexible work arrangements
Permit job sharing especially in case of relatively independent
tasks such as filing, faxing, word processing, photo copying etc.
In order to benefit from diversity, managers should recognise the
potential concerns of employees and make sure that the exchange
between the organisation and employees is mutually beneficial and
satisfying.
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INTERNAL ENVIRONMENT AND HR
Organisations are also influenced by a variety of internal factors
relating to strategy, culture, structure etc.
Mission and Strategy
Internal Policies
Organisational Culture
Organisation structure
Human resource systems
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Designing appropriate HR systems
Issue Focus on
Nature of employment : Job/Career
Recruitment : Internal/external/both
Selection : Merit/other considerations
Training and employee : 6 months/yearly
development actions Regular/irregular/need based
Degree of participation : Top down/bottom up
Incentives : Individual merit/group output
Job security : Lifelong employment/need-based jobs
Employee welfare : Be a model employer (offer those that
are needed by law.)
