Chapter Two: Human

Resource Management
Environments
Chapter outline:
– The external environment
– The internal environment
– Human resource management
model

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 Introduction
• Human Resource Management cannot take
place in isolation from the external and
internal environment.
• The functions of Human resources are
executed on permeable systems.
• These environments affect the human
resource functions, and shape the policies
and practices of human resource
management.
• Today HRM is much more integrated into
both the management and the strategic 1-2
planning process of the organization.
2.1 External Environment
• External environment is the environment that
exists outside the organization.
• They influence the organizational
performance but largely beyond
management’s control.
• It provides opportunities and threats to the
organization and human resource
management.
• It usually includes the broad external
environment, namely, Political /Legal,
Economic, Socio-Cultural and
Technological (PEST) environments. 1-3
 1. Political /Legal Factors
• The Political system,
system such as, democratic or
not, nature of the government and favouring
the employee over the employer, affects the
human resource functions of an organization.
• Government through the enforcement of
different laws also has direct and
immediate impact on HRM function.
function
• Government made different laws that
regulate relationship between employer and
employees including issues, such as equal
employment opportunity (EEO), affirmative
action, safety and health, wages and salaries,
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hours of work, etc.
 1. Political /Legal Factors
• Equal Employment Opportunity: Government
laws require providing applicants an equal
opportunity for employment with regard to race,
religion, sex, disability, age or national origin.
There should not be discrimination during
recruitment and selection of candidates
employees.
• Affirmative Action: Affirmative Action is taken
for the purpose of eliminating the present effects
of the past discrimination. It is the practice of
recruiting, hiring or staffing under-represented
groups or minorities, such as women, disability,
and the disadvantaged groups of the society. 1-5
 1. Political /Legal Factors
• Government passes legislations that will
enforce the employee’s safety and
health.
• Government may set minimum level of
wages and salaries, equal pay for equal
work, hours of work, holiday, leaves, etc
• The surge of government regulations
and laws has placed a tremendous
burden on human resource managers
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 2. Economic Factors
• Economic parameter like GNP, per
capital income, an employment rate,
inflation rate, etc affects HRM.
• If the economy is booming and
unemployment rate is low, it may be
harder to acquire and retain the staff.
• In times of economic decline,
decline
unemployment rate increases and a
greater choice of labor is available to
the employer
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 3. Socio-Cultural Factors
• These factors are created by the society on
human resource management, such as
demographic factors and culture.
• Demographic factors describe the
composition of the workforce, such as age,
sex, race,
race and language.
• Culture is the belief and custom (religion) of
the society.
• It affects the attitude and activities of workers.
• HR managers need to understand the culture
and society from which their employees are
recruited. 1-8
 4. Technological Factors
• The world has never before seen
technological changes occur as rapidly as
they are today.
• Technologies have an impact on HRM by
changing the entire working methods and
systems.
• Technological change will continue to
shift employment from some occupations
to others, i.e., labor-intensive and clerical
jobs will decrease while technical,
managerial, and professional jobs will
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increase
 2.2 Internal
Environment
• An internal environment is the
environment that exists inside the
organization.
• It contributes to the strength and
weakness of the organization.
• There are a number of internal factors
affecting HR Managers work. Some of
them are:
• HR department as it interact with other
departments 1-10
 II. Internal Environment
• Strategy of an organization: Organizations
have several strategies (goals and objectives),
such as growth strategy, survival strategy or exit
strategy.
• Leadership style of the organization:
Leadership styles practiced by top management
and supervisors will affect the relationship
between supervisors and subordinates.
• The style of leadership might be autocratic,
democratic or laissez-faire.
laissez-faire
• Leadership styles adopted in an organization
influences human resource functions.
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 II. Internal Environment
• Nature of the task: The type of the task
to be performed in an organization highly
affects human resource management.
• This is because some jobs can attract or
retain workers, while others might be the
causes of high labor turnover.
• The elements of the nature of the task
include: Degree of physical exertion, Working
environment, Physical location, Degree of human
interaction
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 Summary of Human Resource Management Environment

Unions EXTERNAL ENVIRONMENT Society

Technology
INTERNAL ENVIRONMENT
Legal Considerations

Marketing Operations
ing
af f
St

Unanticipated Events
Di
re
cti
ng
Plan

Human
ning

Resource
1
Management

g
rollin
Economy

Other

Con

Shareholders
Finance Organizing Functional
Areas

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Customers Competition Labor Market
 2.3 The Steps in Dealing
Environmental Challenges

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 1. Monitor the environment

• Human resource managers must be

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 2. Evaluate the impact
• After human resource managers
acquire new information about changes
in the environment, they should
analyze and evaluate the impact of the
environment on the organization’s
human resource management

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 3. Take proactive measures
• Once the impacts of environmental
changes are evaluated, human
resource managers implement
approaches that help the organization
to reach its goals by the aid of human
resources.
• Note that, there are two opposite
approaches of human resource
management, reactive and
proactive. 1-17
 3. Take proactive
measures
• Reactive human resource management
occurs when decision makers respond to
human resource problems, i.e., after the actual
problem happens.
• Proactive approach of human resource
management anticipated human resource
problems and correction action begins before
the problem arises.
• To give effective and efficient solutions to
human resource problems, human resource
managers should take proactive measures
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4. Obtain and analyze
feedback
• The results of proactive measures
taken by the HR manager are
evaluated to see if the desired
outcomes are achieved.

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Thank You!

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