HUMAN RESOURCES ENVIRONMENTCHAPTER-2

HUMAN RESOURCES ENVIRONMENT

After developing investment prospective for making strategic decision about human resources managers need to scan the environment before formulating strategy.

Technology has massive impact on the organizational environment requiring technically qualified employees to run the operations. During these days of rapid changes ,the process of formulating strategies & planning and their implementation is more difficult but important.

Organizations which scanned the environment , developed right strategies and planed alternatives for dealing with changing conditions , were successful comparative to those who ignored these important factors.

The framework for scanning the environment is composed of the following categories:Technology . Organizational structure.Values & attitudinal trend of employees.Managerial trends.Demographic trends.HR utilization trends.International developments impacting

organization.

TECHNOLOGY AND ORGANIZATIONAL STRUCTURE

BROAD INFLUENCES TECHNOLOGY Technology particularly information technology

is having a major impact or the structure of organizations and the nature of managerial work.

Major areas of business , manufacturing , sales, finance, supply chain management and human resources have integrated through company’s software systems.

The information technology has enabled companies to gain numerous benefits like efficiency gains, quicker response time, better inventory management, enhanced coordination and improved decision making.

CONT… Managers to be effective in such an

environment requires special skills as the nature of managerial assignment has changed. Lean and flat organizations, alternative job assignments and opportunities are needed for development of effective managers for future needs.

The use of technology has changed the hierarchal structure of the organizations as physical supervision need has been reduced.

Technology has also reduced work process cycle time. Changes in the work processes and design warrants well planned training and development programs to ensure availability of employees with updated skills.

TECHNOLOGY AND ORGANIZATIONAL STRUCTURE

Influence of HRIS.Influence of HRIS. The organizations have heavily invested in acquisition of fast and

reliable software's ( People soft, HRIS. SAP, JD Edward, MRP, Oracle etc) for different operations including HR information system, which provide facility of automatic human resources processes and immediate information to decision makers.

Redeployment of HR Staff to operating Units.Redeployment of HR Staff to operating Units. HR staff now part of operating units rather than centralized HR

department. This has been done to provide spontaneous HR support to operating units.

HR as business partners

New organization structure.New organization structure. Due to advance technology, the distinction between management and

labour have become blurred. workers are becoming more responsible and accountable as job owners, making decisions at their level;

Task forces , more flexible work arrangements, project teams have replaced normal manager employee hierarchal relationship.

TECHNOLOGY AND ORGANIZATIONAL STRUCTURE All structural changes on account of technological changes are focused to

enhance organizational ability to coupe up with the current & future challenges. There are four new structural forms of interest:

Unbundled corporations.Unbundled corporations.Autonomous business unit functions as profit centers.Traditional support services are outsourced.

Network organizations or virtual corporations.Network organizations or virtual corporations.Organizations which are similar to unbundled corporations.One of the driving force for creating such network

organizations is the need to outsource activities that other companies , consultants, or joint venture partners can perform better or more quickly or at reduced cost.

TECHNOLOGY AND ORGANIZATIONAL

STRUCTURE Cellular organizations.Cellular organizations.

This structural form organizations are typically groups of small technology oriented companies that maintain affiliations over time.

Employees of these companies are mostly technical professionals to take various projects.

Managerial needs for such organizations is technical knowledge, cross functional experience, international exposure, collaborative, leadership and self management skills.

Respondent organizations.Respondent organizations. In this structural form, organization is essentially an entrepreneurial corporation that

exist by filling niches (positions) to supply customized services to unbundled corporations.

in such corporations decision making is quick and is likely to be retained at the level of central entrepreneurial level.

These corporations are risky and have high failure rate. The positive aspect is that employees in such set up have more opportunities to learn

new skills and develop as generalist. Stimulus for entrepreneurial business is technical knowledge of those managers who

can manage a small set up of their own and provide organizations required services/ components / spares at economical price with guarantee of desired quality level.

VALUES & ATTITUDINAL TREND OF EMPLOYEES.

Values .Principles, standards, morale , ethics, concepts ,

beliefs that guide how we make decisions about and evaluations of behaviours and events . Basic conviction that a specific mode or end state of existence is personally or socially preferable to an opposite or converse mode of conduct or end state of existence.

Attitudes.Positive or negative feelings concerning

objects, people, or events.Attitudes are less stable than values.

VALUES & ATTITUDINAL TREND OF EMPLOYEES.

Work ethics may vary over time and places. Older people believe that things were better or at least more moral, more decent, when they were young.

There has been some shifts in work values of importance to strategic management . The Most important of these are values & attitudes of employees towards their employers.

It is important to understand these values and attitudes to understand future human resources environment.

Interest and capability of employees for learning new skills to face challenges of change, flexibility to adjust to changed environment have significant impact on organizational work environment.

IMPACT OF MANAGEMENT TRENDS ON HUMAN RESOURCES

Management of diversity. Effective management of diversity can be supportive to enhance

productivity / efficiency and through this organizations can gain competitive advantage.

Work teams. Work teams have been of increasing interest to managers. Benefits include improved decision making, improved

performance, improved quality, increased flexibility, reduced labour cost, lower employee turnover, greater service efficiency, facilitative for change , shorter product cycle time.

Virtual teams. Members from different functions work together from different

locations, different countries, different time zones, through teleconferences, webex, net meetings etc.

MANAGEMENT TRENDS

HR outsourcing.Most significant forces affecting HR functions are

outsourcing of HR function..This is result of several strategic and operational

influences.. This is intended to have greater efficiency, better

service and less response time and cost effectiveness.Open book management.

The practice of sharing financial and performance information is known as open book management.

The reason for this is the belief that empowered employees can make informed decisions.

MANAGEMENT TRENDS Total quality management. A continuing trend of importance to management strategists is Total

Quality Management pioneered by Edward Deming which is a broad based systematic approach for achieving high level of quality and required to survive against the pressure of world class competition.

TQM emphasized: Articulation of strategic vision. Objectives and accurate measurement. Benchmarking. Employees empowerment and team building. Striving for continuous improvement. Conceptualize quality related activities. Leadership commitment to quality. Emphasis on customer satisfaction.

CONT… TQM emphasizes on training, which makes it

important from HRM prospective as well. Aim of TQM is to add value to all stake holders

in every activity, which is necessary to make company more efficient and increase productivity.

MANAGEMENT TRENDSIntegrated manufacturing.

Integrated manufacturing systems provide a new approach for streamlined manufacturing, which are composed of advanced manufacturing technology, just in time inventory and other technological resources.

When these technologies and managerial systems are combined , integrated manufacturing systems have the potential to provide greater dissemination of information, remove barriers related to functional specialization, promote collaboration to solve quality problems etc.

These systems require knowledge workers and their technical and problem solving skills are advanced to make them more effective at their jobs.

MANAGEMENT TRENDS Reengineering.

Also known as process innovation, core processes redesign and business processes reengineering is practiced since 1980s .

Reengineering requires cross functional coordination and crossing of organizational boundaries .

because it may disrupt existing power relationship andSome senior executives are still not convinced of the ultimate

value of reengineering due to their concerns about long range human impacts due to elimination of l jobs.

MANAGEMENT TRENDS

Management of professionals. Professional requires different form of management. They

often have low organizational loyality, require substatial autonomy, follow their own professional code of ethics and standards.

HR problem for the future will be to provide career path for professionals.

MANAGEMENT TRENDS

Demographic trends –major challenges.Aging workforce, .Racial diversity .Greater feminization of the workforce.Labour shortages-scarcity of skilled , needed labour force. Support services like child care for dual career couples.

TRENDS IN UTILIZATION OF HUMAN RESOURCES Telecommuting.-telecommunication.Telecommuting.-telecommunication.

Remote working / working from home / beneficial, cost effective , no Geographical relocation and travel expense.

Relocation of work-decentralized .Relocation of work-decentralized .Allowed migration of workers from cities to small towns /

rural areas. Companies are also relocating their operations.

Growing use of temporary and contingent workersGrowing use of temporary and contingent workers. Factors contributing to use of temps / contingent workers-advantages,

low cost, responsibility / liability shift.. Factors limiting the use of temps / contingent workers-disadvantages,

training, loyalty, Employee leasing-existing employees are leased to external supplier.

INTERNATIONAL DEVELOPMENTS

Global competition. Global sourcing. North American Free Trade Agreement

(NAFTA) –across boundaries European community.

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IMPORTANCE OF INTERNATIONAL BUSINESS (GLOBAL)

If you are not thinking international,

you are not thinking business management

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GLOBAL ENVIRONMENT AND INTERNATIONAL MANAGERS

Difficulties Operating in Borderless World Challenges

Economic Legal-political Socio-cultural

Multinational Corporations Foreign Markets - Entrance

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A BORDERLESS WORLD

Business is becoming a unified, global field

Companies that think globally have a competitive edge

Domestic markets are saturated for many companies

Consumers can no longer tell from which country they are buying

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FOUR STAGES OF GLOBALIZATION

Domestic stage:market potential is limited to the home countryproduction and marketing facilities located at home

International stage:exports increasecompany usually adopts a multi-domestic approach

Multinational stage:marketing and production facilities located in many countriesmore than 1/3 of its sales outside the home country

Global (or stateless) stage:making sales and acquiring resources in whatever country offers the best opportunities and lowest costownership, control, and top management tend to be dispersed

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GLOBAL (STATELESS) CORPORATIONS

Number is increasing Awareness of national borders decreasing Rising managers expected to know a 2nd or

3rd language Corporate Example – Nestle (Swiss)

CEO Peter Brabeck–Letmathe (Austrian) Half of general managers (non-Swiss) Strong faith in regional managers who are native to

the region

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THE INTERNATIONALBUSINESS ENVIRONMENT

International management is management of business operations conducted in more than one country

Fundamental tasks do not change

Basic management functions are the same - domestic or international Greater difficulties and risks when performing on an

international scale

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INTERNATIONAL ENVIRONMENT FACTORS

Organization

Economic•Economic development•Infrastructure•Resource and product markets•Per capita Income•Exchange rates•Economic conditions

Legal-Political•Political risk

•Government takeovers

•Tariffs, quotas, taxes

•Terrorism, political instability

•Laws, regulations

Sociocultural•Socio values, beliefs•Language•Religion (objects, taboos, holidays)•Kinship patterns•Formal education, literary•Time orientation

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ECONOMIC ENVIRONMENT FACTORS

Economic development

Infrastructure

Resource and product markets

Exchange rates

Inflation

Interest rates

Economic growth

CONT….

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WTO

Goal, is to guide and sometimes urge the nations of the world toward free trade and open markets

Encompasses GATT and all of its agreements

Has legal authority to arbitrate disputes on 400 trade issues

Partly responsible for backlash against global trade

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NORTH AMERICAN FREE TRADE AGREEMENT

1.Went into effect on January 1, 1994

2. Merged the United States, Canada, and Mexico with more that 421 million consumers

3. Breaks down tariffs and trade restrictions on most agriculture and manufactured products

4. August 12, 1992 agreements in number of key areas include: agriculture, autos, transport, & intellectual property

5. January, 2004 -10th anniversary = success and failure

What’s Labour Laws?What’s Labour Laws?

Labour law or employment law is the body of laws, regulations, administrative rulings, and precedents which address the legal rights of, and restrictions on, labourers and their organizations.

I t deals with many aspects of relationship between trade unions, employers and their employees.

The final goal of Labour laws is to reduce the differences between the Employer and Employee which leads in Industrial Growth and Growth of a Nation.

Overview of Labour Laws in Overview of Labour Laws in IndiaIndia

Under the Constitution of India, Labour is a subject in the Concurrent List where both the Central and State Governments are competent to enact legislation.

As per the Constitution of India, matters in labour law contained in Concurrent List are:

• Entry No. 22: Trade Unions, industrialists and labour disputes.

• Entry No. 23: Social Security and insurance, employment and unemployment

• Entry No. 24: Welfare of labour