Enviromental Factors Influencing Hrm Opu 2v684t

PRESIDENCY UNIVERSITY COURSE CODE – HRM 406 COURSE INSTRUCTOR- DR. TARUN TAPAN DHAR SPRING - 2010

Environmental Factors Influence on HR Management

Submitted By

Md. Abul Hasnat ID # 081091025 Date : February 23, 2010

HRM 406 2 Environmental factors: influence on HR management

Introduction Human Resource Management (HRM) seems to be a lasting phenomenon. Twenty years ago there was little understanding for and knowledge about the functional conditions for the human resources of working life, but today HRM is in focus. Companies find themselves increasingly up against the wall if they are not managing human resources in a professional way. The majority of operations costs are staff costs, which itself is an argument for taking interest in using human resources more effectively. The company must recognize that it is no longer in a position to dictate the rules of interaction with employees. It is often the employees that set the agenda because they are the ones who represent the competitive strength of the company. The result is a type of impotence that employers have never experienced before.

Not only are human resources gaining increasing importance for the company, but simultaneously several dilemmas or paradoxes seem to be emerging. Therefore, both top managers and HR professionals must be able to identify ways of balancing, live with paradoxes, and contrasts of strategic, ethical, and practical nature. The value of universal solutions is decreasing, and the need for situational methods and interventions is growing.

The coming of the 21st century globalization poses distinctive HRM challenges to businesses especially those operating across national boundaries as multinational or global enterprises. Global business is characterized by the free flow of human and financial resources especially in the developed economies of European Union (EU), the North American Free Trade Agreement (NAFTA), other regional groupings such as the Association of South East Asian Nations (ASEAN), the Economic Community of West African States (ECOWAS), the Southern African Development Community, etc. These developments are opening up new markets in a way that has never been seen before. This accentuates the need to manage human resources effectively to gain competitive advantage in the global market place. To achieve this, organizations require an understanding of the factors

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that can determine the effectiveness of various HR practices and approaches. This is because countries differ along a number of dimensions that influence the attractiveness of Direct Foreign Investments in each country. These differences determine the economic viability of building an operation in a foreign country and they have a particularly strong impact on HRM in that operation. A number of factors that affect HRM in global markets are identified: (1) Culture (2) Economic System (3) Political System – the legal framework and (4) Stake holders (internal factors). These factors are influencing the overall organization as well as the Human Resource Management (HRM) process of an organization. The Environmental factors which are Influencing the HRM are needed to be controlled by the organization through its strategies for gaining more competitiveness in of maximum output.

Environmental Factors of HRM

There are other factors that have great influences on the HRM can be classified as : • • • •

Labor Market Demographic Factors Social Factors Stakeholders

Economic Factors Economic environment refers to all those economic forces which have bearing on the HR factor.

Suppliers – For HR dept, suppliers are those who provide human Resources to an organization. Ex: Consulting firms, training institutes

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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 organization must endeavor to offer products which gives satisfaction for the money customers pay.

Globalization – Another trend is emerging is the globalization of the world of human civilization. Globalization affects sovereignty, prosperity, jobs, wages, and social legislations. Companies conducting their business all over the world facing HR challenges in managing their employees of different backgrounds. So globalization influencing the whole HRM strategies in a certain level.

Political and Legislative Factors There are three institutions which together constitute the total political environment. They are i) the legislature, ii) the executive, and iii) the judiciary. i)

ii)

iii)

The legislature - The legislature also called Parliament at central level and Assembly at the state level is the law making body. The govt. does the job of implementing the laws and policies in macro level throughout a country. The employers – The executive popularly known as the govt. is the law-implementing body. The legislature decides and the executive acts. The judiciary – Above this two is the judiciary which has the role of watchdog. The main function of the judiciary to ensure that both the legislature and the executive work within the confines of the constitution and in the public interest.

To be specific, HR planning, recruitment and selection, placement , Training and development, remuneration, employee relations and Separation are conditioned by constitutional provisions.

Labour Market Factors

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A labour market is an area from which an organization recruits its labor force or employees. Just as customers are a key element of business success so are the employees that An organization hires to represent their interests. Having quality human resources is very important. The lack of talented people can cripple a company and foster a negative customer experience, which could potentially lead to customer dissatisfaction. To grasp The impact of company’s employee turnover level, you must first have a sense for the Performance levels of the leavers and whether you could have had any influence over an employee’s decision to depart. However, in these times of high employee mobility and two-career couples, some employees may leave a firm for reasons unrelated to their jobs (Becker, Huselid & Ulrich, 2001, p 98). Turnover is one reason organizations must tap into the labor market to fill open positions. A strategic Human Resources partner can be key asset in developing a plan to address future employee needs.

Technological Factors Technology is the process by which inputs from an organization’s environment are transformed into outputs. Every HR function has the potential to be managed electronically. Technology factors are the scientific advances, which influence the competitive position of the enterprise. Maintaining awareness of new technologies decreases the probability of becoming obsolete and promotes innovation. Advancements in technology can impact the transformation plan in many ways. New technology as cited in Develop Vision and Strategy (nod.) can change the demand for a product, render current manufacturing processes obsolete, and reduce costs to undercut competitors, produce new products and a host of other possibilities. So For a fully automated and technologically sound organization; and organization must hire efficient employees which is the core job of HR department. This recruitment is not possible without HR because electronics cannot find out the potentiality of human beings better than human beings.

Social and Cultural Factors So far it has been universally accepted that employees should be treated equally. However, the growing diversity implies that individual sub-groups will have different and often conflicting demands, which will make it necessary to design more focused and diverse personnel policies. An additional, and relatively neglected, problem is that even within a given national context culture and life forms vary across the country. Headquarters located in the metropolis most often designs the personnel policy of large national or international companies. The HR departments design personnel policies and the work is done by people whose life form is usually career

HRM 406 6 Environmental factors: influence on HR management oriented. However, the policies must function for employees in other parts of the country that are perhaps first generation wage earners and whose values and needs are quite different. Therefore, it should not come as a surprise if the company has difficulties in getting its message across to and accepted by front line 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. E.g.: Tata and L& T Tata’s culture – “Hire the right people and let them free” L & T’s culture – “They are known for their professional approach” So different kind of racial, relational, regional, educational backgrounds mix up in a organization. Another issue is the employee’s attempt to balance a personal life with an even more encoming work life. That is the cause of most of the employees’ cultural shock. They cannot keep pace with the culture them working with. So it is difficult for HR personnel to make a balance considering all the social and cultural factors that is influencing its employees by different point of views and thoughts. SO HR is becoming more updated an important in an organization. Social responsibility as a managerial obligation to take actions that protects and improves both the welfare of society as whole and the interests of the organization. In recent years there have been multiple corporate ethical issues that have influenced social views on corporate America. The number of high profile scandals, from Enron to MCI WorldCom, has adversely affected public’s perception of corporate strategy as it relates to decisions that affect shareholder and employee interests.

Demographic Factors Demographics, it is the study of population statistics, affects HR profoundly. The influence of women in work force, the Gen X, Gen Y all influences the HR policies in a certain level of analysis. Demographical factors are Influencing from the beginning of human race in the world in management. The supply workers were the baby boomers. Then Gen X workers are highly effective in of productivity and organizational bonding. So day by day HR is changing and also the trend of HR activities and its different aspect. With the demographic variations HR activities in different places of the world. Such as China HR policies are different then Americans. South Asian people are also different so the whole managerial process is different. Demography is a factor that is changing the trends of HR activities, policies and over all strategies of an organization.

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Internal Factors: The Stakeholders Stake holders are the group of people who have interest in the project, policies, or outcomes of an organization’s decision. Sometimes called constituent groups, they follow the actions of the organization and lobby to have their interests satisfied. These stakeholders affect strategy formulation which is the main mission of HR department to achieve. So these people also have major effects on the HR management of an organization. Stakes holders are divided into categories based on their nature of interest with the company. They prefer different outcomes from different strategies. To deal with these stakeholders it is a great challenge for HR personnel to satisfy them and continuing the smoothness of the organizations activity. Stakeholders can be classified into below categories: •

Shareholders

•

Customers – who are the main motive of a company

• •

•

•

–those

who

owns

shares

of

the

company to run the profit bringing party, are them. Suppliers- can influence the skill level of their clients’ employees by interchanging this skills and experiences. Government - The govt. gives extensive assistance with implementing employment equity programs in federally regulated corporations, thus encouraging sensitivity, training, and skill development not only in equity matters but also generally in management change program. BIU, BYDO these are the organizations of Bangladesh govt. to develop skills of its people. Public – An increasingly important stakeholder is the community itself. Everything of an n organization including HR policies must be ed by the community where it runs its operation. Un ions - A firm’s personal activities will be influenced by its own union’s as well as the union’s 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

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•

consultation with union leaders. E.g.: The Bokaro steel plant has 68 trade unions. Calcutta Corporation has about 100 trade unions. The Employees – Sometimes organization’s strategy is influenced by the kinds of competencies of it employees. If employees are motivated, committed and flexible, the organization might be more willing to grow rapidly to become the market leader easily.

•

Top Management – Much of the HR planning recognizes the powerful decisions of CEO leads a organization to the attainment of its goal. So for influencing the HR policies effectively top management must concern about the overall strategies and avoid favoritism and other unethical activities to keep the climate more motivating for the employees.

Conclusion HRM strategy is determined primarily by organizational strategy. However the environmental factors that shape the HRM planning must be considered by the managers and the planners. They must continue to monitor the environment to get the outmost benefits from its operations. All the factors that are influencing externally or internally on an organization it must be considered by the managers very seriously. Coz the HR management is the system that can influence, motivate and get to work the whole workforce of it to achieve all the goals of it. Thus it can be said that Human resource management should always be concerned about the environmental factors that influence the HRM and be ready to keep pace with it for the long term growth of an Organization.

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