Environmental Influences on HRM

By: Monica Belcourt

 After reading this chapter you should be able to
understand:
Environment
Identify the sources that HR planners use to keep current with business
and HR trends
The methods- including trend analysis, the Delphi technique and impact
analyses- used to predict future trends.
The challenges in scanning the environment
How different factors impact on HRM
How environmental scanning is practiced

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 Environment
• “The environment as composed of those institutions or
forces that affect the performance of the organization,
but over which the organization has little control”.
• Organizations have both an external and an internal
environment. The external environment consists of two
layers,
• The general environment
• The task environment
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 General environment

Technological
Dimension

International
Dimension
Competitors
Task environment

Regulators
Owners Customers
Board of Directors
Employees
Physical environment
Political & Culture
Legal
Dimension Strategic
Partners Suppliers

Economic
Socio cultural
Dimension
Dimension 4
 Environmental Scanning

• Environmental Scanning is the systematic monitoring of

the major factors influencing the organization .
• In the past, HR managers monitored changes that might
affect their programs and policies by reading newspapers
or trade publications .

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 Environmental Scanning ….

• The scanning method may not be perfect, because no

one can accurately predict all the forces that will shape
the future workplace and the workforce.
• However some sources of information and scanning
methods can help us do a better job.
• The following are some of the sources of information
that HR professionals might use to monitor trends in the
environment.
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 Sources of information

 Publications: HR professionals actively scan newspapers, business

publications and HR magazines, journals and newsletters .
 Publications of interest to HR professionals:
U.S.:
Business Week
Fortune
 People management
HR focus
HR News
Work week
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 Publications of interest to HR professionals :
• Research Journals : few names listed….
• Academy of Management Executive
• Academy of Management Review
• Business Horizons
• Business Quarterly
• California Management Review
• Management Review
• Personnel Journals
• Personnel Psychology
• Training and Development Journal
• Human Resource Management
• Journal of Business Ethics
• Journal of Management
• Journal of Staffing and Recruitment
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 Sources of information……
 Professional associates: Associates of interest to HR professionals
are:
Human Resource Planning Society
International Association for Human Resources Information
Management
Ontario Society for Training and Development
Society for HRM
Society for Industrial and Organizational Psychology
World at Work
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Sources of information……

Conferences and Seminars: HR Professionals keep

current and even ahead of emerging trends by attending
conferences, seminars and workshops in Bangladesh and
other countries.
Professional Consultants : HR Professionals can hire
consultants to research or interpret the trends or
environmental impacts.

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Techniques for Scanning
 Trend analysis: Trend analysis is a quantitative approach that
attempts to forecast future personnel needs based on
extrapolating information from historical changes in one or
more organizational indices .
Quantitative analysis
Based on extrapolating information

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Techniques for Scanning…….

Delphi technique: Delphi technique is the

process in which the forecasts and judgments of
a selected group of experts are solicited and
summarized in an attempt to determine the future
of employment.

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Techniques for Scanning…….

 Impact analysis: Impact analysis is a forecasting methods in

which past trends are analyzed by a panel of experts who then
predict the probability of future events.
 Other methods for assessing the future include:
the nominal group technique
Critical incident approach
Scenarios and
Questionnaires
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Challenges in Environmental Scanning

1) Isolating the critical (significant) from the insignificant

2) Inability to determine the current issues
1) Increasing commitment among employees
2) Outsourcing of non-core functions
3) Workplace privacy
3) Finding employees when there is labor shortage
4) Ethnocentrism rises but globalization also rises.
5) Work-life balance- work-family balance

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 Solution
• A proactive approach
• take action before
• lobby with legislators
• public relation firm

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Q. As a HR Manager of a MNC what Environmental factors may
influence the performance of the organizational over which the org. have
no control, discuss briefly?

1. Economic climate:
• Unemployment rate
• Exchange rate
• Tax rate
• Interest rate
• Manufacturing to service
• Multi skilled workers

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 Globalization

• Whole world is a one unit

• Borderless world
Labor Market

• Unemployment rate
• Geographic migration
• Graduation rates

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2. Political and Legislative Factors

• Tax rate
• Tax incentive
• Increase job training
• Reduced public debt
• Common law
• Constitutional law
• Contract law

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 3. Technological factors
• Change in skills
• Training
• Elimination of lower level jobs
• Automation
• Less hierarchy
• Telecommuting

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4. Demographic Factors
• Influence of women
• Growing (old) workforce
• Baby boomers (those who born between 1945-1961):
• work start at 21, retires at 55 and dies at 89,
• this person will have spent 34 years at work and 34 years in
retirement.
• Two –third of baby boomer expected to work during retirement .

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Demographic Factors……

• Baby busters (those who born 1962-1970s):

• bottleneck ( block)of the organization,
• well educated and trained and command significant incomes .
• Arrival of new generation X (those who born in the late 70s and the
80s)
• lived with technologies , fewer expectation from the organization
and independent agent.
• Generation Y (those who born in 1977 to 1997) :
• totally comfortable with technology and have a more global and
tolerant outlook
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5. Social and cultural factors

• Right to privacy
• Work Life Balance ( workplace flexibility – flextime,
part-time work, job sharing , telecommuting , elder
care and child care. Family benefits – subsidies for
child care and elder care)
• Violence in work place

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 Other influential factors
 Stakeholders: groups of people who have vested interests in an
organization’s decisions. Some of the stakeholders are -
Shareholders
Customers
Suppliers
Governments
Unions
Employees
Top management

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 Trends and HR implications
Trend
Economic
1. High unemployment rates
2. Global competition
Labor Market
1. Outsourcing
2. Aging workforce/ consumers
3. Flexible work arrangements
4. Globalization
HR Implications ( suggestions)
1. Low consumer spending , fewer staff needed
2. possible domestic downsizing,
Internationalization.
1. Changing spending patterns
2. More day clients, changing staff distribution
3. Less work clothing needed, more home office
leisure clothes
4. Outsourcing to low-wage countries
Need for managers with global competencies.
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Trend HR Implications
Social
1. Workplace violence 1. Development of HR policies on safety
2. retirement trends 2. Retiring of bulk of boomers fighting for jobs
3. Work-family issues 3. Problems recruiting nontraditional shifts
4. Diversity 4. Workforce reflecting customer demographic

Stakeholders
1. Increasing move to no adversarial
1. Union arrangements
2. Public 2. Demands for excellent customer service,
3. Customers therefore need to train and upgrade sales
4. Suppliers skills
5. Top management 3. A few large customers control type of jobs
and skills
4. Demand for seamless connections, need for
employees
5. Move to recruit global executives
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Trend HR Implications
Regulatory
1. Pay equity 1. Need to review systems, allow
contingency funds
2. Workforce rights 2. More complex terminations ; privacy
issues
3. Part- time benefits legislation 3. Increased casts of part-time employees

Technological
1. E- commerce 1. Increased need for employees with
technological skills
2. Increased telecommuting,
2. Computerization of work nontraditional offices .
Need for results appraisals ( not face-
time judgments )

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