System Model of HRM

System composed of interrelated & interacting parts to achieve

desired goals
System approach to HRM combines itself with business strategy
Many firms in developing countries are facing problems due to their
traditional practices of managing people
The system, functions, components and objectives of modern
organizations differ from traditional organizations
HRM system is linked with organization performance, organization
structure and strategic objectives of the organization
Open system: consists of input-processing-output & feedback
components
Operates within internal & external environment
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HRM System
External Environment Factors
Government law & regulation, Union, Eco condition,
Competitiveness,
Composition of the
labor force,
Geographical location of the
Threats
and Opportunities
organ, Tech.
Inputs
Human Energy
&
competencies
Organizational
Plan
HR Plan
Mgmt
Inventory
Job Analysis
Labour Market

Processin
g
Acquisition
Developm
ent
Ulitization
Maintenan
ce

Outputs
Organizational related
output
Employee related output

Feedback

Internal Environment Factors

Strategy, Goals, Culture, Nature of the task, Group work, Leader's
style & experience
Strengths and Weaknesses

HRM System

1. Inputs of HRM

Human energy & competencies (physical strength,

knowledge, skills, attitudes, experiences etc.)

Organizational plan (organizational goals, strategy, target)

Human resource plan (matches future HR demand with
supply & indicates the HR requirements)

Management inventory (record of HR currently available in

the organization)

Job analysis (specifies job requirements, job specifications)

Labor market (source of external supply for quality human
resources)

HRM System

2. Processing of HRM
a. Acquisition
Ensures entry of right number of people at the right place at the right time in
the organization
Consists of recruitment, selection & socialization
b. Development
Ensures proper competencies of employees to handle jobs
Analyzing development needs
Employee training
Management development
Career development
c. Utilization
Ensures willingness of employees for boosting productivity by doing jobs
effectively
Consists of motivation, performance appraisal, compensation etc.
d. Maintenance
Ensures retention of competent employees in the organization
Labor relations (employer-employee relations & employee discipline,
grievance handling)
Employee welfare (to promote employee safety, health, social security, etc.)
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HRM System

3. Output
a. Organization-related outputs
Goal-achievement
Quality of work life (QWL) (Quality of relationship between
employees & the total working environment of the organization.)
Mechanisms of QWL:
Learning & development
Recognition
Autonomy
Intrinsic/extrinsic rewards
Productivity
Profits
Readiness for change
b. Employee-related outputs
Commitment (achieved through trust, understanding,
communication, loyalty etc.)
Competence (changes in the environment & assume new roles)
Congruence (related to goals, harmony between individual &
organizational goals)
Cost effectiveness (high cost-effectiveness)

HRM System

4. Feedback
Provides information to redesign HRM inputs & processing
based on output effectiveness
5. Internal Environment
Forces in the internal environment are controllable by HRM
Provide strengths & weaknesses
They are organizational goals, policies, structure, reward
system & organizational culture
6. External Environment
Forces non controllable by HRM
Provide opportunities & pose threats
They are technology, politics/law, labour unions, economic
forces, socio-cultural forces
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Internal & External Environment of HRM

A. External environment (outside the organization)

Government Law and Regulation

Affects organization directly
Decisions about hiring, promotion, diversity,
evaluation, employment opportunity,
discrimination, compensation, benefits
regulation, safety laws etc.

Union
An organization that represents the interests of
employees
Shapes the HR policies & practices
Union representatives are included in major HR
decisions
Recruiting, selection, promotion,
compensation, etc.
Not restricted only to the blue-collar workers
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Economic Conditions
Economic devt. of a country gives
priority to the proper mgmt. of HR
Provides career & skill devt.
opportunities
Local companies compete with foreign
ones & thus local companies reform
their work processes
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Competitiveness
Effective workers?
Quality services or good?
New technology?
Lower cost products?
HRM can be a competitive advantage
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Composition & Diversity of the Labor Force

Women
Minorities
Older Employees

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Geographical Location of the Organization

Rural, urban area?
Kinds of workers available
Educational factors
Behavioral factors (attitudes)
Legal-political factors (stability, racists etc.)
Economic factors (structure, inflation, constraints on
ownership etc.)
Socio-cultural factors
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Technology
Technology is a major factor in deciding about
HR policy choices
Use of sophisticated & efficient technology
Increased the quality & volume of the
products/services
Reduced the price level
Coping with the technological environment
demands for knowledge workers
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B. Internal Environmental Influences

Strategy
What an organizations key executives
hope to accomplish in the long run
Selection of a particular HR strategy,
policy & practice
Business firms differ in their HR strategy
due to different business environment &
competitive strategy
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Goals
The goals of organizations differ within &
among departments
Differences in the importance of goals
E.g. profit goals are emphasized, HRM goals
are paid only minimal attention

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Organization Culture
System of shared meaning held by members
A firms way of doing business
How it treats customers & employees
Autonomy of the departments
Degree of employee loyalty expressed
A common value system
Strong or weak culture?
Impact on the behavior, productivity, expectations of the employees
E.g. clear guidelines on punctuality, customer service etc.

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Nature of the Task

Degree of knowledge & ability to use IT
Degree of empowerment
Degree of physical exertion required
Degree of environmental unpleasantness
Physical location of work
Time dimension of work
Human interaction on the job
Degree of variety in the task
Task identity
Task differences & job design

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Group Work
Directly related to the success of HRM
activities
Work-group participation in designing &
implementing HRM is essential

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Leaders Style and Experience

Experiences & leadership style of the
operating manager affects HRM activities
Direction, encouragement, authority to
evoke desired behaviors
Facilitates interactions that occur within
work groups

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