BITS Pilani

Hyderabad Campus

Chapter 2 : Context of Human Resource Management

Learning Objectives

External and internal environment impacting HR functions

BITS Pilani, Hyderabad Campus

Environment may be understood as all those forces

which have their bearing on the functioning of HR
department

BITS Pilani, Hyderabad Campus

Context
HRM
Forcesofare

General

Political- Legal
Economic
Technological
Socio-Cultural forces

Specific

Customers
Suppliers
Competitors
Unions

BITS Pilani, Hyderabad Campus

Political Legal
Legislature, executive , judiciary ,
Article 14: equality before law
Article 15: no discrimination
Article 23: no forced labour
Prohibition of child labour, equal wage act, factor act,
maternity leave , workmen compensation, provident
fund, gratuity act etc
Influences recruitment, placement, training, Employeerelations

BITS Pilani, Hyderabad Campus

Economics
Economic forces income level, purchasing power,
savings, debts, literacy, health, male/female ratio,
population mix etc
All these influences quality of labor which in turn impacts
productivity

BITS Pilani, Hyderabad Campus

Globalization & implications of

global economy
Tendency of firms to extend their sales , ownership
and manufacturing to newer markets abroad
Worldwide company culture
Worldwide recruiting
Global alliance needs highly trained and devoted staff
Deal with virtual workforce
Outsourcing

BITS Pilani, Hyderabad Campus

Technology
Technology plays a vital role in HR functions, in order to
make people more intellectual and efficient.
Managing well knowledgeable people - incentives, WLB,
Flexi time, profit sharing
HRIS: managing a virtual workforce
managing employee alienation
training & retraining employees to manage obsolescence.
providing work life balance
Ex: bank installed special software that made CSR to handle customers
inquiries. Seeking to capitalize on new software, bank upgraded CSR jobs.;
gave training , how to sell other services and thereby improved, profitability.
Other bank didnt ; just system helped service rep. Handle few more calls

BITS Pilani, Hyderabad Campus

Socio- Cultural influence

behaviour of employees
Culture refers to the complex whole which includes
knowledge, belief, art Morales, laws, customs and other
capabilities and habits acquired by an Individual as a member
of society.
Eg: Tata and L& T Tatas culture Hire the right people and let
them free L & Ts culture They are known for their
professional approach

Culture indicates attitude of workers towards work

Time dimensions which influence HRM (past, present, future)
Achievement oriented, effort-reward
Individualistic or collectivism

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Specific environment
Suppliers For HR dept, suppliers are those who provide
human Resources to an organization. Ex: Consulting
firms, training institutes.
Competitors Competition plays significant role in HR
function and Activities. Organization need to groom its
employees through well managed HR planning
programmes to withstand competition
Customers Customers have their own influence on
companies personal Functions . So everybody in the
orgn must endeavour to offer products which gives
satisfaction for the money customers pay.

BITS Pilani, Hyderabad Campus

Specific environment
Unions
A firms personal activities will be influenced by its own
unions as well as the unions of other plants.
A trade union may be understood as association of workers
or management formed to protect their own individual
interest.
All HR activities like recruitment, selection, training,
compensation are carried out in consultation with union
leaders. Eg : The Bokaro steel plant has 68 trade unions.
Calcutta Corporation has about 100 trade unions.

BITS Pilani, Hyderabad Campus

Scanning the Environment

Involves surveillance of the environment to
determine trends and projections that would
affect the fortunes of the organization.
Focuses on the specific environment
Provides relevant information for planning
and decision making
The relevant areas for HRM to be scanned
are labor market, legal environment,
constitutional provisions and technology
12

Human Resource Management (MM ZC441)

1/6/2012

Summary of Chapter
The HRM environment comprises of both external and
internal forces
The external environment consists of political-legal,
economic, technological and cultural factors (PEST)
The internal environment consists of unions, suppliers,
customers , competitors and professional bodies.
The study of environment enables HR experts to
become proactive in their approach to personnel aspects

BITS Pilani, Hyderabad Campus