Chapter
2
Human
Resource Management Environments
Human
Resource Management (HRM) operates within various environments, each influencing the way HR
functions are carried out within an organization. These environments can be
broadly categorized as internal and external.
1.
The
External Environment Affecting HRM
A.
Economic
Conditions
i.
The Population and the Labor Force:
v
The
qualification, attitude, career interest, and motivations of individuals in the
available workforce significantly influence human resource activities and the
overall effectiveness of an organization.
v
Clarification of
the available workforce:
·
Population
includes all people.
·
Eligible to work
= Labor reserve + total labor force.
·
Labor reserve
means individuals not working for economic gain despite being eligible (e.g.,
homemakers, college students, retirees).
·
Total Labor
force = Armed forces + civilian labor force.
·
Civilian Labor
Force = Unemployed + Employed.
v
Impact on the HR
function:
·
Percent of
minorities and women influence equal employment opportunity decisions.
·
Qualifications
and skills in the workforce impact training programs and job design.
·
Availability of
various skills and demand for these skills influence salary and compensation
decisions.
·
Workforce demand
for full-time or part-time jobs affects decisions on work schedules.
ii.
Labor Market Conditions:
- The labor
market encompasses job opportunities, compensation, skills, and
contributions offered by employees.
- Influencing factors:
- Occupation: Skills and
qualifications required, limiting mobility among occupations.
- Geography: Distance
employees are willing to relocate or commute, affecting the supply of
labor force in specific regions.
- Industry: Competition
influences compensation offerings, especially when the supply of
qualified employees is limited.
- Product/Service
Market:
- Demands
for products and services impact the quality and quantity of hires.
- In times
of market growth, organizations increase employment; in decline, they
economize on human resources.
- Inflation:
- Rate
changes affect cost-of-living adjustments (COLA) to salaries, pension
plans, recruiting, interviewing, and training costs.
- Technology:
- Changes
influence the nature of jobs, requiring specific qualifications and
skills.
B.
Government Influences:
v Government regulations directly impact HR management
decisions, intervening in employee and employer relations.
v Legislation and regulation areas include:
·
Equal employment
opportunity, affect recruitment, selection, evaluation, promotion, and various
employment planning aspects.
·
Address sex and
age discrimination.
·
Compensation
regulation, specifying minimum pay based on educational level.
·
Regulation on hours
of work, national holiday, and benefit requirement.
·
Worker's safety laws
affect health and safety programs.
·
Privacy laws protect
employees' personal information.
·
Labor relations
laws and regulations influencing collective bargaining conduct.
C.
Union
Expectations and Power:
- Labor
unions protect employees' rights more effective and organized.
- Union
interests, expectations, and power vary based on industry, membership
numbers, and management response.
- Presence of
a union directly affects HR aspects: recruiting, selection, performance
evaluation, promotion, compensation, and benefits.
2.
Internal
Environmental Conditions
i.
Strategies and Operational Objectives:
- Organizations
formulate strategic and operational objectives that define the business
direction.
- Changes in
strategies determine subsequent plans, including human resource
requirements in terms of quantity, skills, and experience.
ii.
Financial Condition and Flexibility:
Ø Financial status significantly influences personnel
activities.
Ø Good financial condition:
·
There is a likely
increase in employee quantity.
·
There is a potential
for higher salary increments.
Ø Poor financial condition:
·
It may lead to
employee reductions.
·
This is particularly
true for labor-intensive organizations, such as education, healthcare, and
government institutions, where a significant budget portion covers salaries and
benefits.
iii.
Nature of the Task:
Ø The nature of tasks and activities in an
organization influences the types of employees it attracts.
Ø Factors relevant for employees in choosing an
organization include:
·
Physical
exertion requirements.
·
Environmental
unpleasantness.
·
Physical
location of work.
·
Time dimension
of work.
·
Human
interaction on the job.
·
Degree of
autonomy in the task.
iv.
Culture and Philosophy of
Organizations:
Ø Organizational culture encompasses shared values,
beliefs, and traditions among members.
Ø Well-defined and practiced culture:
·
Enables
employees to feel comfortable and adhere to established norms.
·
Examples include
a Culture of Productivity through people or a Culture of Autonomy and
Entrepreneurship.
Human Resource Management Model
i.
The
Matching Model of HRM:
- The
Michigan School (Fombrun et al, 1984) introduced it.
- It advocates
managing HR systems and organizational structure congruently with
organizational strategy.
- It involves
a human resource cycle with four processes: selection, appraisal, rewards,
and development.
ii.
The
Harvard Framework:
- The Harvard
School of Beer et al (1984) developed it.
- Emphasizes
that general managers should develop a strategic vision for employee
involvement and development.
- Features:
- Line
managers take responsibility for aligning competitive strategy and
personnel policies.
- Personnel's
mission is to set policies that mutually reinforce personnel activities.
- Four
HR policy areas: employee influence, human resource
flow, reward system, and work system.
- Aims to
achieve the four "C's": Commitment, Congruence, Competence, and
Cost effectiveness.
- Long-term
consequences of human resource policies evaluated at individual,
organizational, and societal levels.