Chapter 2

The Dynamic of HRM

Environment
 Overview

•
• Dynamics of Human resource
management environment.
• Identify environmental factors that
affect Human resource management .
• Review internal environmental factors
• Who performs HRM tasks
• Define diversity and identify the diverse
workforce that management now
confronts.

 Human Resource Management

•
• Utilization of individuals to achieve
organizational objective


• All managers at every level must

concern themselves with human
resource management


• Five functions
 Human Resource Management
HRM Function

Staffing
Employ
Human
ee
Resource
& Labor
Develop
Relation HRM
ment
s Function

Compens
Safety & ation
Health &
Benefits
Case – Lone Star Manufacturing
 Wayne Simmons, vice president of HR for
Lone Star Manufacturing, returned to his office
from weekly executive staff meeting, he was
disturbed.
 Lone Star, a producer of high – quality
telecommunication equipment, is HQ in Texas,
and has manufacturing plant throughout Texas,
Louisiana and Oklahoma.
 Wayne had just heard a rumor that an
overseas firm has developed a new
manufacturing process that had the potential to
cut costs substantially.
 Should this report prove true, customers
might switch to cheaper product. The three
plants that produce similar products would then
© 2008 Prentice Hall, Inc. All rights reserved. 5
be in serious trouble.
 Lone Star Manufacturing
( Cont ..)
 If the new technology was superior, he
also knew Lone Star might have to cut back
production severely or even close some
plants. These plants are located in areas that
are already experiencing high unemployment
because of the depressed price of crude oil.
 Plant closing would have a devastating
effect on the economies of their respective
communities. A few workers could be
transferred to other locations, but most
would have to be laid off.
 Thus, Wayne is now keenly aware of ways
in which the EXTERNAL ENVIRONBMENT can
have an impact on the operations of Lone
 Environmental Factors
Affecting HR Management
•
• Many Interrelated Factors Affect
HRM
–Internal Environment
–External Environment

 The Environment of HRM
EXTERNAL ENVIRONMENT
INTERNAL ENVIRONMENT

Employee Human
Staffing
& Labor Resource
Relations Development

HR
Management
Safety Functions Compensatio
n
& Health
& Benefits

© 2008 Prentice Hall, Inc. All rights reserved. 8

 The external environment
component
T h e fa cto rs th a t a ffe ct a firm ’ s h u m a n
re so u rce s fro m o u tsid e th e o rg a n iza tio n 's
§ §
b o u n d a rie s
§ Labor Force § Competition
§ Legal § Customers
Considerations § Technology
§ Society § Economy
§ Unions 

§ Shareholders

 Environmental Factors
Labor Force
•
• A pool of individuals external to the
firms from which the organization
obtains its workers.
• The capacities of the firm’s
employees determine to a larger
extent how well the organization
can perform its mission.
• As new employees are hired from
outside the firm, the labor force is
considered an external
 Environmental Factors
Legal consideration
•
• Relates to federal, state and local
legislation, and many court
decisions.
• Compliance with Law
• EEO (Equal Employment
opportunity) – to employ
disabilities.
• OSHA (Occupational Safety and
Health Act) – to provide safe and
 Environmental Factors
Society
• Society may also exert pressure on
HRM. The public is no longer to
accept, without question, the
actions of the business.
• Individuals and special interest
groups have found that they effect
changes through their voices,
votes, and other actions.
• The attitudes and beliefs of the
general public can affect the firm’s
behavior, because those attitudes
 Environmental Factors
Unions
•
• A group of employees who have
joined together for the purpose of
dealing collectively with their
employer.
• Unions are treated as an
environmental factor because,
essentially, they become a third
party when dealing with the
company.
• In a unionized organization, the
 Environmental Factors
Shareholders
•
• The owners of the corporations.
• As shareholders, have invested
money in the firms, they may at
times challenge program consider
by management to be beneficial to
their organization.
• They are Stockholders who
frequently hold lawsuits against
managers and directors, claiming
they failed to look out for
 Environmental Factors
Competition
•
• Firms may face intense competitions
in both their products and services
and labor market.
• Firms must maintain a supply of
competent employees if it is to
succeed, grow, and prosper.
• A firm’s major task is to ensure that
it obtains and retains a sufficient
number of employees in various
career fields to allow the firms to
 Environmental Factors
Customer
•
• The people who actually use a firm’s
goods and services are also part of
external environment.
• Customers constantly demand high
quality products and after
purchase services.
• Sales are often lost or gained
because of variance in product
quality and follow – up service.
 Environmental Factors
Technology
• Technology change cause career
changes.


• One of the most challenging aspect of

HRM will be training and developing
employees to keep with rapidly
advancing technology.
•
• In the case we studied earlier, Wayne
Simmons is well aware of the impact
 Environmental Factors
Economy
•
• The economy of the nation, on the
whole and its various segments, is
a major environmental factor
affecting HRM.
• When the economy is booming,
recruiting qualified worker is more
difficult.
• On the other hand, when a
downtown is experiencing, more
 The Internal Environment

• Mission • Employees
• Policies • Informal
• Corporate Organization
Culture • Labor-
• Management Management
Style of Agreement
Upper •
Managers
•
 The Internal Environment
( Cont ..)
 Mission
• It illustrates what the company is, what the
company does and where the company is
headed.


 Policies
• A written statement that reflects the employer’s
standards and obligations relating to various
employees activities and employment –
related matters.
•
 Corporate Culture
• The beliefs, values and practice adopted by an
organization that directly influence employees
conducts and behaviors 20
 The Internal Environment
( Cont ..)


 Labor Management Agreement

• A binding agreement governing wages, benefits,
representation rights and other working
conditions between a labor union and
management.

21
Who performs human resource
management tasks
•
• The Human Resource Manager
• Shared Service Centers
• Outsourcing Firms
• Line Managers

 Human Resource Manager

•
• Acts in advisory or staff capacity
• Serves an increasing number of
employees
• Shares responsibility with line
managers and HR professionals
• Coordinate HR activities to achieve
organization goal
•
 HR Manager – Example
 Bill Brown, the production supervisor for
Ajax Manufacturing, has just learned that
one of his machine operators has resigned


 He immediately calls Sandra Williams,

the HR Manager, and says, “ Sandra, I just
has a class A Machine operator quit down
here. Can you find some qualified people for
me to interview?”


 “Sure Bill”, Sandra Replies. “I’ll send two

or three down to you with in the week, and
you can select the one that best fits your
needs.”
 HR Manager – Example
 In this instance, both Bill and Sandra
are concerned with achieving
organizational goals, but from different
perspective.
 HOW?
 What are their Responsibility?
 Sandra, as a HR Manager, identifies
applicants who meet the criteria
specified by Bill. Where as Bill primary
responsibility is productions.


 As a HR Manager, Sandra must

constantly deal with many problem
 Shared Service Centers
( SSCS )
 A central place
where routine,
transaction – based
activities that are
dispersed throughout
the organization are
consolidated.
 For eg., a
company with 20
strategic business unit
could consolidate
routine HR tasks and
performs them in one
location 26
 Shared Service Centers
( SSCS ) Performing HR Tasks

•
 Fe w e r H R
Pe rso n n e l
N e e d eHd R M a n a g e rs A ssu m e a M o re

Im p ro ve s Q u a lity
 Outsourcing Firms

• Transfer
• responsibility to

an external
provider


• Contracting with
another
organization
(vendor, third
party provider or
consultant) to 28
Outsourcing

Reduces:
• Cost
• Transaction Time

Improves Quality
Line Manager Performing HR
Tasks

Involved with Human Resources

Used more to deliver HR services
Reduces size of HR department

 MANAGING THE DIVERSE WORKFORCE
 The issue of diversity is one reality of
being globally competitive.
 Today, Levis Strauss has taken the moral
high ground in terms of being socially
responsible by developing a diverse
workforce.
 Earlier in 1908, Levis placed an
advertisement brochure that had “none but
white women and girls are employed”
 But now the firm appears to be
exceptional in this areas and is currently
recognized as “one of the most ethnically
and culturally diverse companies in the US,
if not the world”
 Managing the diverse
workforce
• Single parent • Person with
and working disabilities
mother • Immigrants
• Women in • Yong persons
business with limited
• Dual career education /
families skills
• Workers of color • Education level
• Older worker of employees
•
 Single Parent and working
Mother
•
• Number is growing
• Many marriages end in
divorce
• Widows and widower
who have children
• Need alternative
childcare
arrangement
• Childcare service and
workplace flexibility
needed
Women In Business
• 11.9% of corporate
officers
• Number in entry- and
mid-level
managerial
positions has risen
• More than 9 million
women-owned
businesses
• Increasing number of
nontraditional
households
• Organizations must
address work/family
 Dual Career
 Workers of color
families

• Represent 53% of • Often experience

marriages stereotypes
• Both spouses have • Often encounter
jobs and family misunderstandin
responsibilities gs and
• Challenges and expectations
opportunities • Role conflict
• Flexibility in their • Role overload
workplaces and • Socialize within
careers. their particular
• culture
• 
  Older Worker Immigrants

• Population is • One million legal

growing immigrants per
• Long-term labor year
shortage is • Newer immigrants
developing require time to
• Early retirement is adapt
about to reverse • Managers must
itself work to
• Needs and understand the
interests may different cultures
change and languages
• May require 
 Young Persons with
 Educational
Limited Education Level of
or Skills Employees

• Several thousands of • Bipolar country with

young, unskilled regard to education
workers are hired • Half of new jobs need
• Poor work habits some education
• Tardy or absent beyond high school
• Can do many jobs well • Those with limited
education will be
• Jobs can be de-skilled

left out of
empowerment effort
• 
 Class Room Activity

 Structure Question


1.Identify the HRM Function?

2.What are the challenges of HRM
3.Identify the external environment?
4.Who perform HRM activities?
5.Identify the diverse workforce that
management now confronts