Knowing the Environment of

HRM
HRM environment refers to all those factors which affect the
performance of Human Resource Management department directly or
indirectly.

For becoming successful the organization has to understand the

environment.

Business environment is continuously changing.

The environment of business refers to aggregate of conditions and events that
surround and affect environmental factors:
 External Environment
 Internal Environment
The External Environment of HRM

External Environment consist of those factors which affect an organization’s HR

resources from outside the organization.
Goals of External Environment

To identify the external factors and to balance the demands and expectations of
external factors with the internal requirements to achieve organizational goals
effectively and efficiently.
Economic factors

 Suppliers
 Customers
 Competitors
 Globalization
Political-Legal Factors

The political-legal environment covers the impact of political institutions on HRM

department.
The important legislations:

1. The factories act 1948

2. Trade union act,1926
3. The payment of wages act,1936
4. The minimum wages act,1948
5. The maternity benefit act,1961
6. The employee state insurance act,1948
7. workmen’s compensation act 1923
Social and Cultural Factors

 Society includes, the firm’s own employees, their friends, their relatives and
neighbors also.
 HR manager has to understand the relevance of conducting their business in a
socially relevant and responsible manner.
 Culture creates different types of people who are the part of an organization.
 HR manager has to deal with people by keeping in mind their cultural values.
Technological Factors

 Technological development can dramatically influence the organization’s

environment.
 Technological advancement can create new competitive advantage that are more
powerful than existing one.
 New technology compel people to learn new technological skills.
 Also leads to downsizing of employees.
 As organizations become fully computerized and automated, the demand for
people with multiskilling will grow.
UNIONS

 With the formation and recognition of unions, the issues related to employee’s
interest are no longer determined by the unilateral actions of management.
 They have to be discussed with union representatives.
Professionalism

 Job holders and job seekers have became highly professionalized and
knowledgeable now a days.
 They are only motivated by opportunities which offer challenges and growth in
an organization.
Internal Environment
Missions

 Mission statement tells: what it is, why it exists and the unique contribution it can
make.
 At various levels people should carry out assigned work as per mission.
Policies

 Policies shows route towards goals.

 Policies are guide maps in an organization

Important policies:

1. To provide safe working condition for employees.

2. To encourage the employees to achieve as much of their potential as possible.
3. To provide such compensation to employees.
4. To provide promotional avenues to employees.
Organization Culture

Organization culture is sum total of shared values, beliefs and habits in an

organization.
Organization Conflicts

Organizational conflicts arises because of many factors like:

1. Personal goals VS Organizational goals
2. Personal ethics VS Organizational ethics
3. Authority VS Responsibility
Organizational Structures

Tall organizational structure

Flat organizational structure
HR Systems

 Quality of Personnel
 Creating HRD departments, introducing participative management and quality
circles, providing free flow of upward communication.