The Environment of HRM

What is environment? In simple words, 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 characterized by change and intense competition. Human resource management
is performed in two types of environments- internal and external.

Internal Environment
These are the internal forces or factors which have influence on HR activities of the organization. These consist of
unions, organizational culture and conflict, professional bodies, and organizational climate. A brief mention of these is as
follows:
Unions A trade union is an association of workers or management formed to protect their own individual interests. HR
activities like recruitment, selection, training, compensation, industrial relations and separations are carried out in
consultation with trade union leaders. Unions play important role when a new wage agreement needs to be signed.

Organizational Culture and Conflict Each organization has its own culture that differentiates one organization from
another. Organization culture reflects the past and shapes the future. It is the product of all organization features – its
people, its past, its successes and its failures. Few core values or beliefs shape its culture. Thus, culture is sharing of
some core values or beliefs by the members of the organization.

“Value for time” is the culture of Reliance Industries Limited. The culture of Tata conglomerate is “get the best people
and set them free”. IBM is known for its service and L&T is known for its professionalism.

There is often conflict between organizational culture and employee’s attitude. Individuals have personality,
organizations have cultures. Conflict usually surfaces because of dualities such as - personal goal v/s organizational goal,
discipline v/s autonomy, rights v/s duties, self-confidence v/s arrogance, participation v/s anarchy. Such conflicts have
their bearings on HR activities in an organization.

Professional Bodies the NIPM (National Institute of Personnel Management) as the HR professional body regulates the
functions of HR practitioners in India. Regular Training programs, seminars, conferences, workshops are being held by
the NIPM for the benefit of HR people. The NIPM has also laid down a code of ethics and the HR professionals are
expected to declare their allegiance to the code. The code is beneficial as it reminds HR people about their ethical
obligations toward the employees, organization, profession and society.

Organizational climate Organizational climate refers to the prevailing atmosphere that exists in an organization and its
impact on employees. Organizations can be friendly or unfriendly, open or secretive, rigid or flexible, innovative or
stagnant. The major factors influencing the climate are leadership and communication style. It is reflected in the level of
employee motivation, job satisfaction, performance, and productivity, and thus has a direct impact on organizational
profits. HR managers play a key role in helping line managers throughout the organization to establish and maintain a
positive organizational climate.

External Environment

Economic forces include growth rate and strategy, industrial production, national and per capita incomes, money and
capital markets, competitions, industrial labour and globalization. All these forces have significant influence on wage and
salary levels. Growing unemployment and reservation in employment also affect the choice for recruitment and
selection of employees in organizations.

Political:

Political environment covers the impact of political institutions on HRM practices. For example, democratic political
system increases the expectations of workers for their wellbeing. The total political environment is composed of three
institutions:
1. Legislature: This is called Parliament at the central level and Assembly at the state level A plethora of labour laws are
enacted by the legislature to regulate working conditions and employment relations.

3. Judiciary: This is like a watchdog above the two. It ensures that both the legislature and the executive work within the
confines of the constitution and also in the overall interest of the people. These affect, in one way or the other, all HR
activities from planning to placement to training to retention and maintenance.

2. Executive: It is the Government that implements the law. In other words, the legislature decides and the executive
acts.

Technological:
Technological advances affect the HR functions in more than one way:
First; technology makes the job more intellectual or upgraded.

Second, it renders workers dislocated if they do not equip themselves to the job.

Third, job becomes challenging for the employees who cope with the requirements of technology Fourth, technology
reduces human interaction at the work place. Finally job-holders become highly professionalized and knowledgeable in
the job they perform.

Demographic:

Demographic variables include sex, age, literacy, mobility, etc. Modem work force is characterized by literate, women
and scheduled caste and scheduled tides workers. Now, workers are called knowledge workers’ and the organizations
wherein they work are called ‘knowledge organizations’.

Laws affecting HRM:

The laws affecting HRM can be divided into two broad categories: equal employment opportunity (EEO) aws and other
laws. The major EEO laws cut across nearly every aspect of managing human resources.

Equal Employment Opportunity (EEO)

The concept of equal employment opportunity has undergone much modification and fine-tuning since the passage of
the Civil Rights Act in 1964. Congress has passed numerous amendments to that act and has passed other legislation, as
oversights in the initial act surfaced. Major Supreme Court decisions interpreting the provisions of the act have also
been handed down. Executive orders were signed into law that further strengthened equal employment opportunity.
EEO is a combination of legislative and judicial policy set forth by federal, state, and local governments that ensures fair
and equal treatment of all persons. Job applicants may not be rejected based on discriminatory practices

Affirmative action

A strategy intended to achieve fair employment by urging employers to hire certain groups of people who were
discriminated against in the past Steps that are taken for the purpose of eliminating the present effects of past
discrimination

Major Federal Laws (USA)

There have been many laws passed and court decisions rendered that affect the everyday actions of human resource
management. Human resource decisions that were made in the past may no longer be feasible. Human resource
managers have a responsibility to ensure that actions affecting human resource management adhere to both the letter
and intent of the law. Unfortunately, not everyone may share this view, and that is when problems occur.