HR Control and implications of Business Environment

1. HR ENVIRONMENT
Prepared by Mahuya Ghosh
Research Scholar, FM University

2. What is environment
 Environment is the surrounding or condition in
which we operate.
 Environment comprises all those forces which
have their bearings on the functioning of our
various activities

3. What is HR environment
In a simple sentence, HR environment is
nothing but the dynamic factors which affect
HR activities.

4. Environment HR activities
From these definitions we may clearly derive
a two way relationship between HR and
environment:
While the elements in the environments
regulate the functioning of HR activities, an HR
manager can also use those elements
strategically to complement organization’s
mission and objectives

5. Types of Environment
Internal
 Unions
 Org. culture &
conflicts
 Professional Bodies
External
 Political & Legal
 Economic
 Technological
 Demographic

6.  From the next slide onwards, it will be
described how these environmental factors are
affecting HR and what the ways are, that an
HR can handle and make use of these
environmental factors.

7. Unionism and HR implication
 Trade union is an
organization of workers in
the same skilled
occupation or related
skilled occupations who
act together to secure for
all members favorable
wages, hours, and other
working conditions.
 Trade unions have mustered strength
as a parallel to the growth of
industrialism until1980s. They used
to constitute one of the power blocks
in many countries including India.
Issues related to employees’
interests are no longer solely left with
the management wherever the trade
unions are in existence and
recognized. The disadvantage of
having a unionized workplace is that
it reduces a business's flexibility.
 It is the job of a workers’ union to
push for higher wages and better
benefits. So, Unions might be
unaffordable for many small
businesses.
Union HR implication

8. HR control over unionism
 HR managers can meet regularly with union officials to
build their relationship and discuss forthcoming changes
in the workplace that will impact employees' terms and
conditions. In that way, managers can also presume the
impact of a new HR policy while dropping some hints
before the implementation. One benefit of a union that
HR can take advantage of, is the way that a union can
become a partner of a business. Unions have a natural
reason to thirst for a business to succeed so that their
members can continue to work and receive higher
wages.
 Membership in a union gives members of a work force
a common bond that will extend further than if they
simply worked together. A small business that is
seeking to establish strong loyalty and teamwork in its
workplace might find a union advantageous for this
reason.

9. Organizational culture and HR
implication
 Each organization has
its own culture that
distinguishes one
organization from
another. Culture may
be defined as the
collective programming
of the mind which
distinguishes one group
or category of people
from another.
 There is often conflict between
organizational culture and
employee’s attitude. Conflict
usually surfaces because of
dualities such as personal goal
vs. organizational goal,
discipline vs. autonomy, rights
vs. duties, etc. Such conflicts
have their bearings on HR
activities in an organization.
 The most critical period for
employees is at the initial entry
point, the stage, at which
employees who fail to learn are
labeled “nonconformists” and
this may lead the HR to
terminate the said employee
which eventually affect
Org culture & Climate HR Implication

10. HR control over Org. culture
 Among all those HR practices, recruitment process
has the closest relationship with HR practices. The
implication of this for managers is that recruitment
process being the first point of interaction between the
organization and the prospective employees, could
serve as the right avenue to disseminate vital
information about the organization to the job seekers.
Further, this will enhance the alignment of intending
employees with the organizational belief, value, and
practices, which attempt to ensure a proper match.
In their training programs too, the managers should
endeavor to incorporate the organizational belief,
value and practices to the employees. This will further
sustain organizational culture and help employees
(new or old) adapt to the culture.

11. Professional Bodies & HR
implication
 There are
professional bodies
like NIPM, SHRM
who regulate the
functions of HR
practitioners in
India.
 They provide training
on explanation of
policies, arrange
workshops and
seminars, organize
various courses for
the students as well
as for the
professionals as per
the industry trends.
Professional Bodies HR Implications

12. HR control on Professional
Bodies
 HR can utilize the professional bodies in their
recruitment process. Many HR jobs are usually
posted to the concerned websites.
 HR can use this platform to discuss on a newly
implemented policy or may gather the opinions
from fellow members before a new strategy
implementation.

13. Economic Factors & HR
implication
 Economic forces
include growth rate
and strategy,
industrial production,
national and per
capita incomes,
money and capital
markets,
competitions,
industrial labor and
globalization
 Economic 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.
Economic Factors HR implications

14. HR control & utilization of
Economic upheavals
 First the economic factors affect wage and
salary level of workers, resulting:
• Hiring Freeze, Mandatory vacation, Reduced
workweek, cut in overtime pay, salary
reduction etc. But soliciting cost-reduction
ideas from employees may create among
them a sense of oneness with the company.
• Economic downturn makes the HR more
innovative in recruitment and selection
process.

15.  In the current business world, organizations
are affected by economies throughout the
world and not just the countries in which they
are based or operate from. For example: a
global credit crunch originating in the USA
contributed towards the credit crunch in the UK
in 2007/08.Cheaper labor in developing
countries affects the competitiveness of
products from developed countries.

16. Political
 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 large
number of labor laws are enacted by the
legislature to regulate working conditions and
employment relations.

17.  2. Executive:
It is the Government that implements the law. In
other words, the legislature decides and the
executive acts.
 3. Judiciary:
This is like a watchdog above the two. It ensures
that both the legislature and the executive work
within the confinement 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.

18. Political Environment & HR
implication
 The important labour
laws enacted in India
affecting HRM are,
The Factories Act,
Trade Unions Act,
The Payment of
Wages Act, The
minimum Wages Act,
The ESI Act,
Workmen’s
Compensation Act
etc.
 The political
environment has
direct bearing on
Human Resource
management in the
areas of enacting,
implementing and
ensuring the process
of implementation of
labor laws.
Political Environment HR Implication

19. HR control on Political
Environment
 The key drivers of a political climate include the
extent of external regulations, nature of work
contracts, various labor legislations and case laws
to name a few.
There are many statutes books containing
company law as almost every aspect of an
organization’s operation is controlled through
legislation from treatment of employees to health
and safety. Legal factors are important as
organizations have to work within legislative
frameworks. Legislation can hinder business by
placing onerous obligations on organizations. On
the other hand legislation can create market
conditions that benefit business. Only the
managers need to act as when the opportunity

20. Technology and HR implication
Organizations use technology in
many ways, they have
Technology infrastructure such
as the internet and other
information exchange systems
including the telephone and
conference calling.
Technology systems
incorporating a multitude of
software which help them
manage their business.
Technology hardware such as
mobile phones, computers,
photocopiers and fax machines
which transmit and record
information.
Technological advances affect the HR
functions in more than one way:
 Technology makes the job more
intellectual or upgraded.
 It renders workers dislocated if they do
not equip themselves to the job.
 Job becomes challenging for the
employees who cope with the
requirements of technology.
 Technology reduces human interaction
at the work place.
 Job-holders become highly
professionalized and knowledgeable in
the job they perform.
 Shifting in power is found among the
employees
Technology HR Implications

21. HR control and utilization of
technology
 Shifts in information technology enabled HR
managers to perform most of the on-line by using HR
software, implementation of people soft, SAP, ERP
etc. But this shifts demand the HR managers to be
more flexible and adaptive. Technology has created a
society which expects instant results. This
technological revolution has increased the rate at
which information is exchanged between
stakeholders. A faster exchange of information can
benefit the managers as they are able to react quickly
to changes within their operating environment.
However an ability to react quickly also creates extra
pressure as businesses are expected to deliver on
their promises within ever decreasing time scales.

22. Demographic factors & HR
implications
 structure of employment in
an organization changes
with the entrance of
workforce with different
backgrounds (region,
community, sex, religion,
tradition, culture etc)
There has been a
significant changes in the
structure of employment
with the entry of
candidates belonging to
SC or ST and with more
female employees.
 These changing demographical factors
have complicated the task for HR
managers. This changing structure of
workforce has led to the introduction of
new values in the organization. So, this is
the responsibility of HR to handle the
situation wisely otherwise alienation from
job and increasing counter productive
behavior of employees may be observed.
 HR managers may arrange to provide
some fringe benefits to improve employee
morale, can introduce machinery to
redress grievance and to encourage
employees participation in decision
making.

Demographic factors HR implications

23. HR control on Demographic
Factors
 These demographical changes have introduced a
new generation of employees who can question
the decisions of superiors if they find it irrational.
So, this is the responsibility of HR to handle the
situation wisely.What is important, to maintain
parity in remuneration and responsibility among
various categories and levels of employees. Now,
workers are called ‘knowledge workers’ and the
organizations wherein they work are called
‘knowledge organizations’. So, HRs can easily
encourage employees to participate in decision
making and the like to pave the way for industrial
democracy to meet the changing situation in the
corporate industry.

24. Environment Scanning
Environmental scanning is the process through
which organization can maintain awareness of
the opportunities and threats existed in the
surroundings—both macro and micro—within
which they operate.

25. Utility of Scanning
 The data collected from scanning is really an
important one. The managers can modify the
data as appropriate to their organizational
strategies. The ability to demonstrate
organizational agility in response to
scrutinizing environment is essential; that is to
act upon the information is perhaps even more
important..

26.  Some organizations conduct environmental
scans on an ad hoc basis, often in response to
crises or other unexpected events. Still other
organizations choose to conduct scanning on
a continuous basis—always collecting,
processing, and analyzing data. While there is
no one right answer for every organization, in
today’s highly turbulent (and sometimes even
volatile) business and organizational
environments, it may be prudent to consider
conducting environmental scanning more
frequently, as opposed to less frequently.

27. External trends to scan
 Organizations need to monitor trends of a wide and
varying nature, including, but in no way limited to
 Economic trends
 Competitive trends
 Political trends
 Global trends
 Business trends
 Industry trends
 Employment trends
 Technological trends
 Demographic trends

28. Internal factors to be scanned
 Like external factors, internal factors can also be
scanned and utilized by the HR managers.
Managers can understand and utilize the movements
in unions if they collect the information regularly.
Organizational culture is dynamic and can be geared
up by the managers as per the industry requirements.
Professional bodies always work on the interests of
employees.

29. Conclusion
 To conclude, we may say that HR and
environment are complementing factors for
one another. While getting affected by the
environmental factors HR activities can also
utilize and steer the environment strategically
to gain competitive advantage for the industry.