Everything you need to know about human resource environment.

Human Resource Environment is a part of social environment which includes the concept, viewpoints, work culture, attitudes, efficiency, skills, productivity, nature and behaviour of HR, employees’ demand and supply, motivational aspects, compensation methods and industrial relation concerning of HR practices.

With the growing and integrated role and perception of social and human resource environmental factors, there is a transformation process was emerged for the last two decades.

The shift from manual process to machinery process, from unskilled employees to the skilled employees, from manufacturing economy to a service economy, from machine age to the autocratic age have been accompanied by many transformations.


Learn about:-

1. Meaning of Human Resource Environment 2. Need to Study Human Resource Environment 3. Factors Affecting 4. Changing Environment 5. Trends, Practices and Perspective Viewpoints.

Human Resource Environment: Meaning, Need, Factor Affecting, Trends Practices and Perspective Viewpoints


  1. Meaning of Human Resource Environment
  2. Need to Study Human Resource Environment
  3. Factors Affecting Human Resource Environment
  4. Changing Human Resource Environment
  5. Trends, Practices and Perspective Viewpoints of Human Resource Environment

Human Resource Environment – Meaning

Within HR scenario, the business environment have focus some new aspects and avenues with some changing values. Presently the people become the most valuable asset of the industry and there is required to get new talented and technological based persons.


The entire social as well as business environment duly effect to the HR concepts, practices and performance in a wide range of operations. Comprehensively the social environment have a wide scope to influence and direct to HR scenario within economic and industrial areas.

The Human Resource Environment is a part of social environment which includes the concept, viewpoints, work culture, attitudes, efficiency, skills, productivity, nature and behaviour of HR, employees’ demand and supply, motivational aspects, compensation methods and industrial relation concerning of HR practices.

With the growing and integrated role and perception of social and human resource environmental factors, there is a transformation process was emerged for the last two decades. The shift from manual process to machinery process, from unskilled employees to the skilled employees, from manufacturing economy to a service economy, from machine age to the autocratic age have been accompanied by many transformations.

Human Resource Environment – Need to Study HR Environment

Within the globalised economy, there are several significant environmental trends and changes faced by HR managers and employees that pose major challenges. Here, there is need to study the HR environment in order to make proper awareness in HR practices, to raise skills and efficiency, to uplift HR productivity and to overcome the problems and challenges.


The aspects as well as factors to be responsible to study the human resource environment are as given here:

1. In order to create and develop intellectual capabilities among employees, there is need to develop the learning and knowledge attitudes among employees;

2. In order to determine and prepare social values, ethical norms and several code of conducts within the purview of employees;

3. In order to analyse and implement effectively and perceptively the business and labour laws and provisions;


4. For strengthen and develop the work plan for productive and constructive activities by the employees;

5. In order to make congenial and harmonious work-culture at work places, there is need to analyse all the relevant aspects as arising out of environmental studies;

6. In order to solve and overcome different societal issues, evils and conflicts, there is need to analyse the social environment;

7. For managing and organising the mechanical and technological advancement as well as new and innovative methods at the work place;


8. In order to take sound, rational and comprehensive decision making invariably relating to HR practices;

9. In order to determine long term strategies for different internal and external aspects of HRM as well as to develop HR efficacies; and

10. In order to study, analyse and develop the personal skills and efficiency, there is a need to study HR environment.

Human Resource Environment – 2 Major Factors Affecting: External and Internal Forces

Environment is an important element in the HRM model and therefore, it is necessary know what the environment is and how it influences HR functions in an organization. Environment consists of all those factors which have their bearing on the functioning of the HR department.


These forces are divided into external factors and internal factors. External factor include political and legal, technological, economic and cultural whereas internal factors include unions, organisational culture and conflicts and professional bodies. Analysis of the environment is essential for the HR manager and his/her team in order to be proactive to the environment and not reactive to the environment.

Following are the factors affecting human resource environment:

Factor # A. External Forces:

These factors exist outside the organization and the organization has least control over these factors.

The external forces mainly include:


1. Political and Legal Environment:

The environment includes the impact of the political institutions on the HRM department.

In a democratic set up like India which together constitute the total political environment:

(a) Legislature – It is also called Parliament at the central level and advisory at the state level. It is basically a law making body. The various labour laws are enacted by this institution.

(b) Executive – It is also known as the government and it is a law implementing body. It acts according to the decisions of the legislature.

(c) Judiciary – It plays the role of watchdog and ensures that both legislature and executive work in the interest of public.


Political environment affect the labour through the labour laws. There are many labour laws which are related to terms and conditions of employment, work conditions, payment of wages, industrial disputes, health, safety and welfare of the labour.

Effect of Political Environment on HRM:

All HR activities are affected in one way or other by the political environment.

The following activities are mainly affected by the constitutional provisions:

(a) HR Planning

(b) Recruitment


(c) Selection

(d) Placement

(e) Training and development

(f) Employee Relations

(g) Separations

2. Economic Environment:


Economic environment refers to all the economic factors which directly or indirectly affect the HRM.

The following are the components of economic environment:

(a) Suppliers:

Under HRM, the suppliers are the agencies or parties who make available the human resources to the organization.

These agencies are as follows:

(i) Employment Exchanges


(ii) Universities

(iii) Colleges

(iv) Training Institutes

(v) Casual Labour Contractors

(vi) Consulting firms

The type of employees received by the organization depends on the suppliers to a large extent.


(b) Competitors:

Some of the HR functions or activities are influenced by the competitors. This is because the number of organizations is competing for the human resources, which increases the importance of staffing function and its appraisal and compensation activities.

Now the individual is offered job by many organizations and the organization which provides him best terms and conditions wins the competition. Therefore, when the employees from outside become difficult to obtain, the organizations have to groom its own employees with help of HR activities.

(c) Customers:

The Company’s personnel function is also influenced by the customers. It is well known that customers want high quality products at the reasonable prices and therefore, everybody in the organization should strive to offer such products which provide desired satisfaction to the customer.

(d) Industrial Labour:

Many changes have been taken place in the industrial labour especially in the organized sector.

Some of these changes are:

(i) Level of Commitment:

Now the labour is committed to the industrial setting which leads to the stabilization of the work force. The worker who joins the job in an urban undertaking though linked with his village but it is unlikely that he will go back. Therefore, the present generation of young workers has accepted the industrial employment as a way of life. But the true picture is that though the labour is committed to industry but it is not committed to the work which leads to the low productivity of our industrial labour.

(ii) Protective Legislation:

So many legislations have been enacted by the government from time to time for protecting the interest of the workers. This has resulted into 51 central acts spread over 2030 pages, and 103 state laws covering approximately 2970 pages adding a total of 5000 pages of labour laws. So the working conditions, job security, compensation, health and safety have been improved considerably over the years.

(iii) Economic and Social Status:

The economic and social status of today’s workers has vastly improved. Improved skill contents, matching educational and training inputs, and increased emoluments have made the industrial employment as the first attraction of the young job seekers.

3. Globalisation:

India’s economy is gradually getting integrated with the global economy.

Globalization has considerable influence on the HR function which can explained as follows:

(a) Employee hiring, training, motivation, compensation, and retaining are guided by the global perspective.

(b) The department can become the source of competitive advantage for the company by discharging the HR functions effectively and by helping the best qualified people execute the company’s strategy on the global scale.

(c) A work force that is knowledgeable and skilled at doing complex things keeps the company competitive and attracts foreign investment.

(d) The benefits between globalization and workers are mutual.

(e) Every advanced nation is increasingly becoming globalized, skills and cumulative learning of its work force becomes its competitive assets.

4. Technological:

Technology affects the HR function in the following ways:

(a) With the advancement in technology jobs tend to become more intellectual or upgraded. Now the jobs require the skills of educated and knowledgeable workers.

(b) The introduction of new technology dislocates workers unless they become well equipped to work on new machines which makes obligatory on the part of HRM to train workers and to rehabilitate those who are displaced or cannot be trained.

(c) Those employees who pick up and acquaint themselves with new technology, the job will be challenging and rewarding.

(d) Technology also has its impact on human relations as technology lays down the requirements for much of the human interactions in the organizations.

5. Cultural Forces:

Culture includes knowledge, belief, art, morals, laws, customs, and other capabilities and habits acquired by an individual as a member of a society.

Culture influences the HR function as follows:

(a) The attitude of the worker towards his work depends upon his cultural background. Our workers are known to have a deep seated apathy towards work. Tasks are performed without any interest, dedication, or pride. Further, there is indiscipline at all levels and poor superior subordinate relationships.

(b) Culture trains people along particular lines, tending to put personality stamp on them. When people with different cultural backgrounds promote, own and manage organizations, they themselves tend to acquire distinct culture.

(c) Time dimension which affects the HRM has its basis in culture. Time orientation refers to the people’s orientation – past, present, and future. HRM focuses on present and care more for employees on the rolls. Employees are hired and maintained as long as they are useful to the organization and dispensed as they cease to be so.

(d) Work ethics, effort reward expectations, and achievement needs which are significant inputs determining the employee behaviour at work are the results of the culture.

Factor # B. Internal Forces:

The HR activities are also influenced by the internal forces.

Prominent internal forces are:

1. Unions:

The firm’s personnel activities are influenced by its own union as well as the unions of the other firms. A trade union is an association of workers or management formed to protect their own individual interests. The role of a union is too well known. All HR activities – recruitment, selection, training, compensation, IR and separations are carried out in consultation with the trade unions.

Few organizations are lucky to have one union. Encouraged by ideological rifts and personal ambitions of leaders the organized labour unions are splitting and there are multiple unions. The Bokaro Steel Plant has for example 68 unions, and Calcutta Corporation has 100 of them.

2. Organisational Culture and Conflict:

Every organization has its own culture. Organisational culture is the result of all the organization’s features – its people, successes, and its failures. Organisational culture shapes the future by reflecting the past. Therefore, it becomes necessary for the HR specialists to adjust proactively to the culture of the organization. The organizational culture is shaped by its core values and beliefs.

For example the following cultures were adopted by different organizations:

TATA – Get Best People and Set them Free

L&T – Professional Approach

Reliance Industries – Competitive Spirit

IBM – Service

GM – Product Innovation

There is often conflict between organisational culture and employees’ attitude.

Following dualities are the reasons for conflicts:

(a) Personal Goal vs. Organisational Goals

(b) Personal Ethics vs. Organisational Ethics

(c) Rights vs. Duties

(d) Discipline vs. Autonomy

(e) Self Confidence vs. Arrogance

(f) Short Term vs. Long Term

(g) Leadership vs. Follower ship

(h) Delegation vs. Abdication

(i) Participation vs. Anarchy

(j) Doing vs. Becoming

(k) Feedback vs. Abuse

(l) Cleverness vs. Wisdom

HR department are required to develop and enforce policies in these areas as these are not the hypothetical conflicts and they occur daily in organizations.

3. Professional Bodies:

The impact of the apex body, National Institute of Personnel Management (NIPM), on HR experts is minimal. The body has not been able to prescribe its accreditation for the HR manager. Infact the minimum professional qualification for HR professional is also not defined by it. In spite of all this the role of NIPM in providing the insights to the HR manager cannot be ignored. For the benefit of HR experts the NIPM organizes the periodic training programmes, seminars, and conferences.

The code of ethics is also formulated by NIPM and it also offers the post graduate diploma in personnel management. The code on ethics reminds HR people about their ethical obligations towards the employees, organization, government, profession, and society.

Human Resource Environment – Changing Human Resource Environment

The human resource environment is changing very fast and the changes are requiring it to play an ever more crucial role in organizations. These trends include work force diversity, technological trends, globalization and changes in the nature of jobs and work.

Within the HR scenario, with the advent of globalisation and technology, the pace and scope of change has increased substantially. In high intensive of change environment, there are new skills, integrated occupational designs, reengineering job contents, technological advancement, organisational restructuring, redeployment, outsourcing and downsizing etc., have become a way of life and are accompanied by change.

In respect of HR scenario, the changes may be individual and group level, proactive, organisational, structural, developmental, occupational, incremental and transformational etc., may take place.

1. Work Force Diversity:

The current decade is witnessing the changes in the composition of the work force; specifically it will continues to become more diverse as women, minority-group members, and older workers are joining the work force. Changes in racial composition are even more dramatic. The labor force is also getting older. Increased diversity placing tremendous demand on the HR management function.

As the work force ages, employers will have to grapple with greater health care costs and higher pension contribution. Some advanced countries are facing a shortage of workers aged 25 to 34, while the career opportunities in management for workers in the 35 to 44 age cohort may be constrained by the abundance of more experienced members of the 45 to 54 age cohort.

With more females in the work force, an upswing in the number of dual-career couples will force more employers to establish child care facilities on or near company premises and to accommodate the travel, scheduling, and moving needs of dual-career employees.

2. Technological Trends:

Technological changes will continue to shift employment from some occupations to others while continuing to a rise in productivity. For example, telecommunication and internet has already made it relatively easy for many to work at home. Computer-aided design/ computer aided manufacturing systems plus robotics continues to increase.

Manufacturing advances are eliminating many blue-collar jobs, replacing them with knowledge workers. Similar changes are taking place in office automation, where personal computers, word processing, and management information systems continue to change the ways office work is done

Labour intensive jobs are decreasing while technical, managerial, and professional jobs increasing. Jobs and organizational structures are being redesigned, new incentive and compensation plans are being instituted, new job descriptions written, and new employee selection, evaluation, and training programmes instituted all with the assistance of HR management.

Technology will also compel firms to become more competitive. Information technology has also speeded the fall of hierarchy. Managers now depend less and less on yesterday’s stick-to-the chain of command approach to organizing. Every employee with a personal computer on his desk can access the firm’s computer network and get needed information. HR plays an integral role in any such changes.

3. Globalization:

Finns are increasingly extending their sales or manufacturing to new markets abroad, and, for businesses everywhere, the rate of globalization in the past few years has been phenomenal. Production is becoming globalized too, as manufacturers around the world put manufacturing facilities where they find it most advantageous.

This globalization of markets and manufacturing has vastly increased international competition. Many firms have responded successfully while others have bid farewell to the market.

4. Trends in the Nature of Work:

Technological changes and globalization are causing changes in the nature of jobs and work. Technological changes have permitted companies to move to locations with lower wages. There is also a trend towards increased use of part-time and temporary workers. However, the most notable trends in the nature of work are the trends to service jobs, and to knowledge work and the stress on human capital.

5. Shift from Manufacturing to Service:

An enormous shift from manufacturing jobs to service jobs is taking place globally. These types of jobs will demand new types of knowledge workers and new human resource management methods to manage them.

6. Knowledge Work and Human Capital:

“The typical business is increasingly becoming knowledge-based, an organization composed largely of specialists who direct and discipline their own performance through organized feedback from colleagues, customers and headquarters. For this reason, organizations are becoming more information based.”

As a result, the distinguishing characteristics of companies today and tomorrow, is the growing emphasis on human capital – the knowledge, education, training, skills and expertise of a firm’s workers, at the expense of physical capital like equipment, machinery, and the physical plant.

The growing focus on education and human capital reflects several social and economic factors. For managers, the challenge of fostering intellectual or human capital lies in the fact that such workers must be managed differently. New human resource management systems and skills are required to select and train such employees and to foster their self-discipline and commitment

Role and Responsibility of HR Professional in Changing Environment:

In the context of changing environment led by globalization, liberalization, and technological advances, the role of human resources in creating and sustaining competitive advantage for organizations has changed drastically. As a result, the role and responsibility of HR professionals have changed.

Their changed role and responsibility are to focus on strategic HR issues, designing and taking proactive actions, developing integrated HR system, working as change agent, and marketing HR’s potential contribution. Let us see what aspects are involved in these.

i. Focus on Strategic HR Issues:

In this changing environment, there is a high need for focusing on strategic HR issues; functional/operational issues will emerge out of these. The earlier practice of HR has been to put emphasis on functional/operational issues. As a result, HRM has not played its role meaningfully and it was accorded the status of almost a second class citizen in organizations.

Now, the situation is quite different. HRM has to play significant role in corporate strategic management. Therefore, strategic HR issues have to be identified and dealt with adequately. A strategic HR issue is one that has long-term implications for HR practices as well as for the organization as a whole.

One way of identifying strategic HR issues is to align HRM with strategy of the organization and, then, to look at the HR issues which are critical to implementation of the organizational strategy. Not only that, HRM can even contribute to formulation of organizational strategy by showing how an ensuing strategy will be facilitated through the effective utilization of human resources.

Focusing on strategic HR issues has one basic in-built advantage. In that it frees the top- level HR professionals from undertaking functional/operational issues which can be taken care of a comparatively lower levels or can be outsourced, a new practice in HRM.

ii. Proactive Actions:

In order to counter environmental challenges, HR professionals have to take actions on proactive basis rather than on reactive basis. Taking actions on proactive basis involves identification of likely changes in factors affecting HR practices, designing actions to meet the requirements of the likely new scenario, and putting those actions in practice before any issue becomes a problem for the organization.

As against proactive actions, reactive actions are taken in the light of the actual change in factors affecting HR practices. The process goes like this- change takes place in a factor, creates problem for the organization, HR professionals make efforts to tackle the problem.

This process of tackling a problem in HR area becomes quite costly for organizations. For example, because of changed environment, if an organization faces high rate of employee turnover and it devises strategies to minimize employee turnover rate, it will lose precious talents, its reputation in the human resource market will go down, and it will become difficult for it to attract talents.

For taking actions on proactive basis, HR professionals need to keep themselves abreast with the contemporary HR practices on global basis. They have to interact with what is happening outside their own organization; rather than looking inwardly, they have to develop the liking for looking outwardly too.

iii. Developing Integrated HR System:

In order to meet environmental challenges, HR professionals must develop integrated HR system. An integrated HR system is one that has well-balanced subsystems continuously interacting among themselves. Since in most of the organizations, HR functions emerge and work on incremental basis, there is often a lack of coherence in the functions.

In incremental approach, decision making is basically meant for problem solving rather than going for new opportunities. When a problem emerges, it is solved. When this problem becomes of recurring nature, a new section is created. This process goes on resulting in creation of several sections and sub-sections within a department without caring for how these sections and sub-sections contribute to each other and for the department as a whole.

As against the above, in an integrated system, each subsystem is designed keeping in view how it contributes to total HR system; how various subsystems interact among themselves to contribute positively to each other; their placement and resources allocated match with their contribution to HR system; and their roles and norms are specifically prescribed.

As a result, HR system contributes much more positively to organizational effectiveness as compared to any of the alternative arrangements.

iv. Working as Change Agent:

In this dynamic environment, HR professionals must work as change agent in the organization. A change agent is one who perceives the need for and initiates change. Because of changing environment, organizational change has become a more recurring issue.

Such changes may be either of minor nature happening on regular basis and brought about by internal organizational personnel or of major nature necessitating the help of external consultants. In both these cases, HR professionals have to play active role as any organizational change has some HR issues, and without tackling HR issues, no organizational change will be effective.

For managing minor organizational change, organization’s internal personnel are sufficient to take up the various issues in which HR professionals concentrate on HR issues. However, in the case of major organizational change like designing a new course of strategy which has very low linkage with the existing strategy external consultant is required. He diagnoses the problem, analyses its root causes, and suggests suitable actions.

This process takes long time in which internal personnel also work as internal change agents. HR professionals have to work as internal change agents on HR issues in such a case. However, they do not have authority over those who are likely to be benefitted by organizational change. Given the characteristics of organizational life, HR professionals must negotiate, persuade, and mobilize human resources of the organization.

v. Marketing HR’s Potential Contribution:

There is a tendency to put more emphasis on visible activities that generate revenue to the business. From this point of view, HR activities do not directly fit with business requirements. As a result, HR profession has been facing an identity crisis throughout its evolution.

Challenges before HR professionals in marketing HR’s potential contribution are twofold. First, managers in the organization, particularly line ones, may not believe that HR issues are so critical for organizational effectiveness. Second, managers may believe that even if some of the HR issues are critical to the organization, HR professionals are ill-equipped to sort out such issues; at the best, they can provide operational support.

Because of this state of affairs, HR professionals must market the potential contribution of HR. Instead of tendering advice about HR issues when sought by line people, HR professionals need to work in partnership with these people and provide them customized HR solutions having practical bias rather than having theoretical orientation.

It is the responsibility of HR professionals to understand the business processes of line people and identify how better they can help these people by taking up HR issues in a much better way.

Human Resource Environment – Trends, Practices and Perspective Viewpoints

Within the HR environmental scenario, there are different trends and practices have emerged. These practices have been emerged with the concepts, methods, approaches and processes as follows by HR management in any organisation. In industrial area there are certain problems and challenges have been arising with the changing and fast work behaviour. Here, the different perspective viewpoints have also discussed to overcome the problems and challenges as arising out of there HR trends.

There are different environmental trends incorporate the HR practices. Somehow these practices may create some challenging parts also.

Here, some of the perspective viewpoints to overcome the HR challenges as arising out of them are briefly stating here:

1. Outsourcing:

i. Developing core competencies

ii. Managing job security and employees’ job recognition

iii. Managing morale and productivity

2. Technological Advancements:

i. Managing employee alienation

ii. Developing training modules and conducting training programmes

iii. Retaining present employees to manage obsolescence

iv. Organise a virtual workforce.

3. Workforce Composition:

i. Managing HR strategies for hiring, retaining and motivating employees to different generations

ii. Develop a balancing part of life style driven for new employees

iii. Develop a better work culture with a balancing form.

4. Workforce Availability:

i. Develop and forecast a worthwhile HR supply and demand forecasting

ii. Ensure proper availability of trained and skilled workforce

iii. Determine the number of workforce with other productive resources.

5. Downsizing:

i. Managing morale and commitment with survive employees

ii. Better organisational culture

iii. Better behavioural relations with retained employees

iv. Provide counselling for better life style to employees who lose their jobs.

6. Mergers and Acquisitions:

i. Provide job security during mergers

ii. Ensuring continued employees’ work performance

iii. Develop HR practices to accumulate the employees’ performance

iv. Provide motivational devices during employees’ transit period.

7. Competitive Advantages:

i. Develop training modules based on competencies

ii. Focus on new avenues of skills, knowledge and education of employees

iii. Recruit trained and skill employees.

8. Knowledge Aspects:

i. To encourage employees for continuous learning

ii. To motivate and retained workers

iii. Facilitating sharing of knowledge within organisation

iv. Enhancing cross functional team behaviour and team work.

9. Motivational Aspects:

i. To build morale and enthusiasm

ii. To make team spirit

iii. To integrate the role of individual and groups

iv. Work recognition and determine work responsibilities.

10. Formal and Informal HR Interactions:

i. To make ideal and stable organisation

ii. To determine objective based HR groups

iii. To determine planned and strategical HR practices

iv. To develop informal coordination among employees.

11. Ageing Group of Workforce:

i. Managing the demand and supply gap for skilled and qualified workforce

ii. Determine motivational retirement policies

iii. Determine a programme to retain skilled and experienced employees.

12. Women in Workforce:

i. Strategizing to attract and retain educated and skilled women workers

ii. Conducting programmes for women who opt for career breaks

iii. Providing facilities such as crèches and flexible working hours, etc.

13. Societal Issues:

i. To encourage the employees for basic education

ii. To conduct social awareness and social upliftment programmes

iii. To aware about social responsibilities of employees

iv. To educate employees to become an ideal citizen.

14. Industrial Disputes:

i. To develop an amicable platform for collective bargaining

ii. Proper work recognition, motivational benefits and stimulate the human aspects of employees.