TITLE OF PROJECT

ENVIRONMENTAL FACTORS INFLUENCING HRM

By
Pipash Sharma

Under the guidance of:

Shromona Neogi

MASTER IN BUSINESS ADMINISTRATION

SUPREME KNOWLEDGE FOUNDATION GROUP OF INSTITUTIONS

1, KHAN ROAD, P.O. HOOGHLY, WEST BENGAL
 ACKNOWLEDGEMENT

I take this opportunity to thank my supervisor and mentor Shromona Neogi, of the department of
management for guiding me in my work. She has been consistently steering me to the right direction
and at every step helping me out how to work on the term paper. I am gratefully indebted to her for
her valuable suggestions and guidance in my area of work. Her continuous encouragement during
the period of my study has helped me to accomplish my work and see the effectiveness of my work
in this final stage.

I also thank all the faculty members of the MBA department for their whole-hearted involvement
and input in my work. They were kind in helping me with various books in support of my work. I
thank the central library of Supreme Knowledge Foundation Group of Institutions for providing
immense help in providing books. Without their continuous help and support I could not have
completed this term paper.

My acknowledgment would remain incomplete if I do not thank my parents for their continuous
support and help during the period where I had to undergo severe stress in completing this work
that needed lot of financial and emotional support. My profound gratitude and their unfailing
support have helped me in the completion of this work.

Name: Pipash Sharma

MAKAUT Roll No.:05
Semester:1st
Session:2nd
 Department of Business Administration
Supreme Knowledge Foundation Group of Institutions
1, Khan Road, P.O. Hooghly, West Bengal

Date- 13/04/19

TO WHOM IT MAY CONCERN

This is to certify that the Project report titled “ENVIRONMENTAL FACTORS INFLUENCING
HRM” Has been carried out by Mr./MS Shromona Neogi of Department of Business Administration,
Supreme Knowledge Foundation Group of Institutions towards the partial fulfiiment of the course under
my supervision. I have approved the project report for the submission.

Shromona Neogi

(Signature of Faculty)
 CONTENT

INTRODUCTION –

Human Resource Management (HRM) seems to be a lasting phenomenon. Twenty years ago there was
little understanding for and knowledge about the functional conditions for the human resources of
working life, but today HRM is in focus. Companies find themselves increasingly up against the wall if they
are not managing human resources in a professional way. The majority of operations costs are staff costs,
which itself is an argument for taking interest in using human resources more effectively. The company
must recognize that it is no longer in a position to dictate the rules of interaction with employees. It is
often the employees that set the agenda because they are the ones who represent the competitive
strength of the company. The result is a type of impotence that employers have never experienced
before.

Not only are human resources gaining increasing importance for the company, but simultaneously
several dilemmas or paradoxes seem to be emerging. Therefore, both top managers and HR professionals
must be able to identify ways of balancing, live with paradoxes, and join contrasts of strategic, ethical,
and practical nature. The value of universal solutions is decreasing, and the need for situational methods
and interventions is growing.

The coming of the 21st century globalization poses distinctive HRM challenges to businesses especially
those operating across national boundaries as multinational or global enterprises. Global business is
characterized by the free flow of human and financial resources especially in the developed economies of
European Union (EU), the North American Free Trade Agreement (NAFTA), other regional groupings such
as the Association of South East Asian Nations (ASEAN), the Economic Community of West African States
(ECOWAS), the Southern African Development Community, etc. These developments are opening up new
markets in a way that has never been seen before. This accentuates the need to manage human
resources effectively to gain competitive advantage in the global market place. To achieve this,
organizations require an understanding of the factors that can determine the effectiveness of various HR
practices and approaches. This is because countries differ along a number of dimensions that influence
the attractiveness of Direct Foreign Investments in each country. These differences determine the
economic viability of building an operation in a foreign country and they have a particularly strong impact
on HRM in that operation. A number of factors that affect HRM in global markets are identified: (1)
Culture (2) Economic System (3) Political System – the legal framework and (4) Stake holders (internal
factors). These factors are influencing the overall organization as well as the Human Resource
Management (HRM) process of an organization.
The Environmental factors which are Influencing the HRM are needed to be controlled by the
organization through its strategies for gaining more competitiveness in terms of maximum output.

Environmental Factors of HRM

There are other factors that have great influences on the HRM can be classified as :
• Labor Market
• Demographic Factors
• Social Factors
• Stakeholders

Economic Factors
Economic environment refers to all those economic forces which have bearing on the HR factor.

Suppliers – For HR dept, suppliers are those who provide human Resources to an organization. Ex:
Consulting firms, training institutes

Competitors – Compertition plays significant role in HR function and Activities. Organization need to
groom its employees through well managed HR planning programmes to withstand competition .

Customers – Customers have their own influence on companies personal Functions. So everybody in the
organization must endeavor to offer products which gives satisfaction for the money customers pay.

Globalization – Another trend is emerging is the globalization of the world of human civilization.
Globalization affects sovereignty, prosperity, jobs, wages, and social legislations. Companies conducting
their business all over the world facing HR challenges in managing their employees of different
backgrounds. So globalization influencing the whole HRM strategies in a certain level.

Political and Legislative Factors

There are three institutions which together constitute the total political environment. They are i) the
legislature, ii) the executive, and iii) the judiciary.

The legislature - The legislature also called Parliament at central level and Assembly at the state level is the
law making body. The govt. does the job of implementing the laws and policies in macro level throughout
a country.

The employers – The executive popularly known as the govt. is the law-implementing body. The legislature
decides and the executive acts.

The judiciary – Above this two is the judiciary which has the role of watchdog. The main function of the
judiciary to ensure that both the legislature and the executive work within the confines of the
constitution and in the public interest.
 To be specific, HR planning, recruitment and selection, placement , Training and development,
remuneration, employee relations and Separation are conditioned by constitutional provisions.

Labour Market Factors

A labour market is an area from which an organization recruits its labor force or employees. Just as
customers are a key element of business success so are the employees that An organization hires to
represent their interests. Having quality human resources is very important. The lack of talented people
can cripple a company and foster a negative customer experience, which could potentially lead to
customer dissatisfaction. To grasp The impact of company’s employee turnover level, you must first have
a sense for the Performance levels of the leavers and whether you could have had any influence over an
employee’s decision to depart. However, in these times of high employee mobility and two-career
couples, some employees may leave a firm for reasons unrelated to their jobs (Becker, Huselid & Ulrich,
2001, p 98). Turnover is one reason organizations must tap into the labor market to fill open positions. A
strategic Human Resources partner can be key asset in developing a plan to address future employee
needs.

Technological Factors

Technology is the process by which inputs from an organization’s environment are transformed into
outputs. Every HR function has the potential to be managed electronically. Technology factors are the
scientific advances, which influence the competitive position of the enterprise. Maintaining awareness of
new technologies decreases the probability of becoming obsolete and promotes innovation.
Advancements in technology can impact the transformation plan in many ways. New technology as cited
in Develop Vision and Strategy (nod.) can change the demand for a product, render current
manufacturing processes obsolete, and reduce costs to undercut competitors, produce new products and
a host of other possibilities. So For a fully automated and technologically sound organization; and
organization must hire efficient employees which is the core job of HR department. This recruitment is
not possible without HR because electronics cannot find out the potentiality of human beings better than
human beings.

Social and Cultural Factors

So far it has been universally accepted that employees should be treated equally. However, the growing
diversity implies that individual sub-groups will have different and often conflicting demands, which will
make it necessary to design more focused and diverse personnel policies. An additional, and relatively
neglected, problem is that even within a given national context culture and life forms vary across the
country. Headquarters located in the metropolis most often designs the personnel policy of large national
or international companies. The HR departments design personnel policies and the work is done by
people whose life form is usually career oriented. However, the policies must function for employees in
other parts of the country that are perhaps first generation wage earners and whose values and needs
are quite different. Therefore, it should not come as a surprise if the company has difficulties in getting its
message across to and accepted by front line employees.

Culture refers to the complex whole which includes knowledge, belief, art Morales, laws, customs and
other capabilities and habits acquired by an Individual as a member of society. E.g.: Tata and L& T

Tata’s culture – “Hire the right people and let them free” L & T’s culture – “They are known for their
professional approach” So different kind of racial, relational, regional, educational backgrounds mix up in
a organization. Another issue is the employee’s attempt to balance a personal life with an even more
encompassing work life. That is the cause of most of the employees’ cultural shock. They cannot keep
pace with the culture them working with. So it is difficult for HR personnel to make a balance considering
all the social and cultural factors that is influencing its employees by different point of views and
thoughts. SO HR is becoming more updated an important in an organization.

Social responsibility as a managerial obligation to take actions that protects and improves both the
welfare of society as whole and the interests of the organization. In recent years there have been multiple
corporate ethical issues that have influenced social views on corporate America. The number of high
profile scandals, from Enron to MCI WorldCom, has adversely affected public’s perception of corporate
strategy as it relates to decisions that affect shareholder and employee interests.

Demographic Factors

Demographics, it is the study of population statistics, affects HR profoundly. The influence of women in
work force, the Gen X, Gen Y all influences the HR policies in a certain level of analysis. Demographical
factors are Influencing from the beginning of human race in the world in management. The supply
workers were the baby boomers. Then Gen X workers are highly effective in terms of productivity and
organizational bonding. So day by day HR is changing and also the trend of HR activities and its different
aspect. With the demographic variations HR activities in different places of the world. Such as China HR
policies are different then Americans. South Asian people are also different so the whole managerial
process is different. Demography is a factor that is changing the trends of HR activities, policies and over
all strategies of an organization.

Internal Factors: The Stakeholders

Stake holders are the group of people who have interest in the project, policies, or outcomes of an
organization’s decision. Sometimes called constituent groups, they follow the actions of the organization
and lobby to have their interests satisfied. These stakeholders affect strategy formulation which is the
main mission of HR department to achieve. So these people also have major effects on the HR
management of an organization.

Stakes holders are divided into categories based on their nature of interest with the company. They prefer
different outcomes from different strategies. To deal with these stakeholders it is a great challenge for HR
personnel to satisfy them and continuing the smoothness of the organizations activity. Stakeholders can
be classified into below categories:
Shareholders –those who owns shares of the company • Customers – who are the main motive of a
company to run the profit bringing party, are them. • Suppliers- can influence the skill level of their
clients’ employees by interchanging this skills and experiences. • Government - The govt. gives extensive
assistance with implementing employment equity programs in federally regulated corporations, thus
encouraging sensitivity, training, and skill development not only in equity matters but also generally in
management change program. BIU, BYDO these are the organizations of Bangladesh govt. to develop
skills of its people. • Public – An increasingly important stakeholder is the community itself. Everything of
an n organization including HR policies must be supported by the community where it runs its operation.
• Un ions - A firm’s personal activities will be influenced by its own union’s as well as the union’s of other
plants. A trade union may be understood as association of workers or management formed to protect
their own individual interest. All HR activities like recruitment, selection, training, compensation are
carried out in consultation with union leaders. E.g.: The Bokaro steel plant has 68 trade unions. Calcutta
Corporation has about 100 trade unions. • The Employees – Sometimes organization’s strategy is
influenced by the kinds of competencies of it employees. If employees are motivated, committed and
flexible, the organization might be more willing to grow rapidly to become the market leader easily. • Top
Management – Much of the HR planning recognizes the powerful decisions of CEO leads a organization to
the attainment of its goal. So for influencing the HR policies effectively top management must concern
about the overall strategies and avoid favoritism and other unethical activities to keep the climate more
motivating for the employees.

Conclusion

HRM strategy is determined primarily by organizational strategy. However the environmental factors that
shape the HRM planning must be considered by the managers and the planners. They must continue to
monitor the environment to get the outmost benefits from its operations. All the factors that are
influencing externally or internally on an organization it must be considered by the managers very
seriously. Coz the HR management is the system that can influence, motivate and get to work the whole
workforce of it to achieve all the goals of it. Thus it can be said that Human resource management should
always be concerned about the environmental factors that influence the HRM and be ready to keep pace
with it for the long term growth of an Organization.

References
James Mannie Shuler, Understanding Organizations and Management Through Triangle
Analysis and Performance Universal publisher, 2006.

John Bratton, and Jeffrey Gold , Human Resource Management: Theory and Practice, Macmillan
presss,1999

Michael Armstrong, A handbook of human resource management practice, Kogan Page Limited
edition, 2007.