HUMAN

RESOURCE
ENVIRONMENT
SUBMITTED TO: SUMAN MA’AM
SUBMITTED BY: DIVYA(07), FIZA(08)
UNIVERSITY BUSINESS SCHOOL
PANJAB UNIVERSITY, CHANDIGARH
 HRM
• Human resource management (HRM)
is the practice of recruiting, hiring,
deploying and managing an
organization's employees.
• According to Flippo, “Human resource
management is the planning, organizing,
directing and controlling of the
procurement, development,
compensation, integration, maintenance
of human resources to the end that
individual, organizational and societal
objectives are accomplished.”
 BUSINESS ENVIRONMENT
• The conditions, circumstances and
influences that affect the organization’s
ability to achieve its objectives. Business
Environment means a collection of all
individuals, entities and other factors,
which may or may not be under the control
of the organisation, but can affect its
performance, profitability, growth and even
survival.
• According to P. Gisbert “Environment is
anything immediately surrounding an
object and exerting a direct influence on it.”
 HR Environment
Environment comprises all those forces
which have their bearing on the
functioning of various activities including
human resource activities. Environment
scanning helps HR manger become
proactive to the environment which is
characterised by change and intense
competition. The forces are- political-
legal, economic, technological, cultural,
unions, and professional bodies. Then
there are strategy and task, leadership,
management and organizational culture.
 FACTORS INFLUENCING

INTERNAL EXTERNAL
INTERNAL ENVIRONMENT
POLICIES

HR SYSTEMS MISSION

INTERNAL
ENVIRONMENT

ORG. PROFES-
SIONAL
CULTURE BODIES

ORG. ORG
STRUCTURE CONFLICT
 MISSION
Mission is the very purpose and
justification for the existence of a
firm. An organisation’s mission
statement tells- what it is, why it
exists and the unique contribution it
can make. At various levels, people
must carry out assigned tasks keeping
the overall mission of the firm in
mind. The HRM functions are also
affected by the mission of the
organisation.
 POLICIES
Policies are the guide maps in the organisation. Policies tell people what they may
or may not do. These direct the manner in which the objectives of the organisation
are to be achieved. Objectives show the destination but the route towards that
destination is shown by policies.
Some of the important policies that influence the work of an HR manager are
listed as follows:
i. To provide safe working conditions for employees.
ii. To encourage the employees to achieve as much of their potential as possible.
iii. To provide such compensation to employees that encourages high level of
performance.
iv. To provide promotional avenues to employees.
 ORGANISATIONAL CULTURE
• Organisational culture is the sum total of
shared values, beliefs and habits within an
organisation. It depicts the personality of the
organisation. The HR managers have to adjust
positively to the culture of the organisation.
• Understanding the type of culture that prevails
within a firm is important in order to formulate
appropriate HR policies and strategies. HR
managers have to choose the paths that best
reflect the culture of the firm and the attitudes
of the people.
• For eg:- The culture of Tata conglomerate is
“get the best people and set them free”.
 ORGANISATIONAL CONFLICTS
• Organisational conflict or workplace conflict,
is a state of discord caused by the actual or
perceived opposition of needs, values and
interests between people working together or
there may be conflict between organizational
culture and employees attitude. There is
also conflict within individuals – between
competing needs and demands – to which
individuals respond in different ways.
• Conflict usually surfaces because of dualities
such as personal goal vs. organizational goal,
discipline vs. autonomy, rights vs. duties, etc.
Such conflicts have their bearings on HR
activities in an organization.
 ORGANISATIONAL STRUCTURE
Basically, there are two types of organizational structures—tall and flat.
Tall or Pyramid type of organizational structures are suitable to companies
that are labour oriented. Here the authority is vested at the top and the
pyramid shows the hierarchy of positions.
Flat organisations are suitable to technology oriented companies which
indicate decentralization of authority.
 HR Systems
• The survival, development and performance of an organisation depends
heavily upon the quality of its personnel.
• In view of the importance of HR, organisations today are creating HRD
departments, introducing participative management and quality circles,
providing free flow of upward communication and enhancing the status
of the employees. These changes are not the end but a humble beginning
to the status of the HR function in the years ahead.
While designing HR subsystems, the HRM might
consider the following points:
 PROFESSIONAL BODIES
• According to Kotler and Armstrong the internal environment
that affect human resource practitioners comprises of
customers, suppliers, compensation, new entrants and
competitors. HRM professionals should analyze their internal
environments for achieving their organizational objectives and
frame policies and strategies by taking all these factors into
matter.
EXTERNAL ENVIRONMENT

POLITICAL-
LEGAL

ECONOMIC TECHNOLOGICAL

EXTERNAL
FACTORS

PROFESSIO-
UNIONS
NALISM

SOCIAL
 Economic Factors
Economic factors include all those economic forces which affect the HR
function. Highly relevant economic factors are suppliers, customers,
competitors, and globalisation.
A brief description of these factors is as follows:
• (i) Suppliers:
As regards the HR department, the suppliers are those who provide human
resources to the organisation. The suppliers include the universities,
colleges, employment exchanges, training institutes, consultancy firms etc.
The quality of inputs of employees depends upon the suppliers.
• ii) Customers:
Customers of the organisation also influence the HR functions. Now-days,
customers are considered the kings. They want high quality products at
reasonable prices. Each and every employee in the company must
contribute towards achieving the quality of goods.
 Economic factors
(iii) Competitors:
Competition in a particular industry plays a very important role in the HR
functions and activities As the number of competitors increases the
importance of staffing function and compensation practices also increases.
(iv) Globalisation:
Due to globalisation, the HR managers are required to play challenging
roles and create competitive advantage for their concern. Global firms have
to continually reorganise their operations and refocus their energies around
their crucial areas of competence. Today the business environment has
become highly volatile in nature..
 Political-Legal factors
• The political-legal environment covers the impact of political
institutions on the HRM department. All activities of HRM are
in one way or the other affected by these factors.
• HR managers have to be aware about the legislations enacted by
the governments at the centre and the states.
Some of the important legislations affecting HRM in
India are:-

i. Factories Act, 1948

ii. Trade Unions Act, 1926
iii. The Payment of Wages Act, 1936
iv. The Minimum Wages Act, 1948
v. Employees State Insurance Act, 1948
vi. Workmen’ Compensation Act, 1923
 Social and cultural factors
• A firm has to operate by public consent to satisfy society’s needs.
Considerable pressure can be exerted on the firm to alter its practices, if the
public believes that it is not operating in the best interests of the society.
HR managers have to understand the relevance of conducting their business
in a socially relevant and responsible manner.\
• A few examples of societal pressures are as follows:
i. When the firm is operating in an area where large scale unemployment is there,
it cannot afford to hire only qualified employees. The firm has to compromise
by hiring people who are capable of being trained.
ii. If the expectations or the tall claims made by the firm are not met, the fate of
the firm is automatically sealed.
iii. Before cutting jobs in a big way, HR managers have to assess the societal
reactions beforehand and come out with proactive steps etc.
• Cultural factors affect the HR functions in the following ways:
i. Culture creates different types of people who become members of an
organisation. HR managers have to deal with people keeping in mind
their cultural values.
ii. The attitudes of the workers toward work are the result of their cultural
background.
iii. Time dimension, which influences HRM, has its roots in culture. In
some cultures, people are oriented towards the past, in others they tend
to be more focussed on the present. Still some others are futuristic in
nature. For example, Japanese have a futuristic society.
iv. Work ethics which determine the individual behaviour in the
organisations, is the result of culture.
v. Ethics in a work environment implies hard-work and commitment.
Strong work ethics ensure motivated employees and the reverse is true
in case of weak work ethics.
 Technological environment
• In the present competitive world, technological developments can
dramatically influence an organisation’s environment. Technological
advancements can create new competitive advantages that are more
powerful than the existing ones.
• Technological advancement affects the HR function in the following
ways:
i. New technologies, generally, compel people to learn a new set of skills
altogether or to upgrade their existing skills and knowledge.
ii. New technological advancements also lead to downsizing of workers.
Increased automation reduces the number of employees in the
organisations.
 iii. In many emerging industries, the positions that have been filled up
with workers possessing superior technical skills and knowledge, have
tilted the power base from management to technical workers.
iv. Technological changes lead to collaborative team work where
managers, technicians, and analysts work together on projects.

The impact of technology on the HR function is quite profound. In the days

ahead, the risk and hazardous jobs as well as repetitive jobs would be
handed over to the robots. As organisations become fully computerised and
automated, the demand for people with multi skills will more.
 Unions
Trade unions constitute one of the major power blocks in many
countries. With the formation and recognition of unions, the
issues relating to employee interests are no longer determined
by the unilateral actions of the management. These have to be
discussed with union representatives. Thus, the scope of
managerial discretion in HR decisions has been narrowed
down.
 Professionalism
• Job holders and seekers have become highly professionalised and
knowledgeable now-a-days. On the one hand, such organisations can
boast of a progressive and modern outlook of its personnel; but on the
other, the problems faced are also serious.
• A few of these problems are as follows:
i. It is a difficult job to motivate such employees. The traditional
incentives hardly affect these employees. They are motivated only by
opportunities which offer challenges, growth and achievement.
ii. Retaining such employees in the organisations is another difficult job.
The modern employees are known for job hopping and rootlessness.
The company has to make several allowances to discourage such
practices.
Case study: GOOGLE
 Case study: GOOGLE
• Google caters to a global audience and its diverse workforce reflects the
diversity of its global customer audience. In more than 40 countries around
the world, it has opened more than 70 offices.
• Google is headquartered at Mountain View California.
• The search engine giant provides a variety of internet and cloud based
services meant for individual, professional and business use. Google has
reached the position of the best with the help of a highly talented and
motivated workforce that it has managed with great care.
• The secret of Google’s success is its innovative work culture. Its culture
drives innovation and performance which is exemplary and a source of
inspiration for others. At the centre of its smart culture and structure is the
strategic role of the HR. Google’s highly innovative HR machinery ensures
that the culture it has created can be sustained. The success and reputation
Google has earned in a short period, is not based on just its technological
capabilities but on HR innovation too. It is a successful company that
knows how to value its human capital. Its facilities and perks are matchless.
However, if the turnover rate is still high then might be there are bigger
challenges before Google. First of all, Gen Y’s loyalty is difficult to obtain.
The entire world is not enough for this generation. Google might still have
to innovate further to match this generation’s expectations fully. Apart
from it, several more things are complicated inside the tech companies
including the work itself. Still, if Google is the best employer, then the
reasons are more than evident.