Summary HR Chapter Two

CHAPTER TWO Human Resource Management Environments 2. Introduction What is environment? In simple words it is the "totality of all factors which influence both the organization and human resources sub-system". Environment comprises all those forces which have their bearing on the functioning of various activities including human resource activities. Environment is an important variable in the HRM model. It may be understood as all those forces, which have their bearing on the functioning of the HR department. It is desirable to know what the environment is and how it influences HR functions in an organization. Environmental scanning is important to HR managers to become proactive and not reactive to the environment which is characterized by change and intense competition. HRM processes in an organization do not operate in a vacuum. They are influenced by and influence the external environment (outside the organization) and internal environment (inside the organization). 2.1. The External Environment The external (macro-environmental) factors separately or in combination can influence the HR function of any organization. The job of a HR manager is to balance the demands and expectations of the external groups with the internal requirements and achieve the assigned goals in an efficient and effective manner. They must identify, evaluate, and react to the forces outside the enterprise that may affect its operations. External environmental influences such as government laws and regulations, demographic, economic conditions, technological, social condition, and the labor market condition have a significant impact on HRM processes. 2 2.1.1. Government Law and Regulations A powerful external environmental influence is government law and regulations, which affect organizations directly. Federal regulations influence HRM activities, policies, and programs. When an organization makes decisions about minimum wage, working time, managing diversity, employee safety and health, downsizing, and discipline, it must weigh the impact of government regulations. The government regulates and influences some aspects of HRM more directly than others. Major areas of legislation and regulation include: Equal employment opportunity and human rights legislation, which directly affect recruiting, selection, evaluation, and promotion, and indirectly affect employment planning, orientation, career planning, training, and development. Discrimination based on sex, age, and disability. Compensation regulation, which affects pay, hours of work, unemployment, and similar conditions. Benefits regulation, which affects pensions and retirement. Labor relations laws and regulations, which affect the conduct of collective bargaining. Privacy laws. Therefore, laws and regulations have a direct effect in the management of HR. Legal issues affect almost all aspects of HRM, from the initial recruitment and selection of applicants to their discharge, retirement or lay off. In other words, there are almost no HR decisions that remain unaffected by government rules and regulations. 2.1.2. Economic Condition Economic environment is of great concern to company everywhere. Economic environment refers to all those economic forces, which have a bearing on the HR function. The components of the economic environment are:- Growth strategy, Industrial production (productivity) 3 Population, National and per capita income, Money and capital markets, Suppliers, Competitors, Customers and Industrial labor.