Elements/ Components of HRM Environment
Environment literally means the surrounding external objects, influences or circumstances under which someone or something exists. The environment of any organization is “the aggregate of all conditions, events and influences that surround and affect it”. 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 (Human Resource) manager become proactive to the environment which is characterized by change and intense competition.
Human resource management is performed in two types of environments that is internal and external.
- Internal Environment: These are the forces internal to an organization. Internal forces have profound influences on HR functions. The internal environment of HRM consists of unions, organizational culture and conflict, organizational objectives, policies etc.
- Unions: Trade unions are formed to safeguard the interest of its members like recruitment, selection, training, compensation, industrial relations and separations are carried out in consultation with trade union leaders.
- Organizational culture and conflict: As individuals have personality organizations have culture. Each organization has its own culture that distinguishes one organization from another. Culture may be understood as 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 the Nepal Tourism board is “Naturally Nepal once is not enough”. HR practices need to be implemented that best fit the organizations culture. There is often conflict between organizational culture and employed attitude. Conflict usually surfaced because of qualities such as personal goal Vs organizational goal, discipline Vs autonomy, right Vs duties etc. Such conflicts have their bearings on the HR activities in an organization.
- External Environment: External environment includes forces like economic, political, technological, socio-culture etc. These exert considerable influence on HRM.
- Economic 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. Crowing unemployment and reservation in employment also affect the choice for recruitment and selection of employees in organizations.
- Political Environment: Political environment covers the impact of political institutions on HRM practices. For example, democratic political system increases the expectations of workers for their well being. The total political environment is composed of three institutions.
- Legislature: This is called parliament at the central level and assembly at the country level. A plethora of labour laws are enacted by the legislature to regulate working conditions and employment relations.
- Executive: it is the government that implements the law. In other words, the legislature decides and the executive acts.
- Judiciary: This is like a watch dog 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.
- Technological Environment: Technology is a systematic application of organized knowledge to practical tasks. Technological advance affect the HR functions in more than one way. First, technology makes the job more intellectual or upgraded. Second, it renders worker 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, jobholders become highly professionalized and knowledgeable in the job they perform.
- Socio-Cultural Environment: Socio-cultural environment differs from country to country. It mainly comprises the customs, values and demographic characteristics, often reflected in laws, rules and regulation of a country. There are four dimensions of national culture which effect employee’s work-related attitudes.
- Power distance: Managers operating in such value systems feel powerful and remain distant from the subordinate employees.
- Uncertainty avoidance: In countries with a low level of uncertainty avoidance, people are encouraged to take risk and to work in ambiguous situations.
- Individualism-collectivism: In individualistic cultures, managers are very individualistic. They work behave from an individual perspective.