HRM in A Dynamic Environment: Excel Books

3-1 EXCEL
BOOKS
Chapter
3
HRM IN A DYNAMIC
ENVIRONMENT
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3-2
ANNOTATED OUTLINE
INTRODUCTION
Organisations are open systems and are, therefore, influenced by
the environment (internal as well as external ) in which they operate.
HRM In A Dynamic Environment

3-3
External and internal factors influencing
the Personnel function
External factors Internal factors

 Technological factors  Mission
 Economic challenges  Policies
 Political factors  Organisational culture
 Social factors  Organisation structure
 Local and Governmental issues  HR systems
 Unions
 Employers’ demands
 Workforce diversity

3-4
Technological Changes And HRM
Technology includes tools, machinery, equipment, work procedures

and employee knowledge and skills. The impact of technology on HR
can be profound, as the following things clearly reveal:
 New skills, knowledge, experience and expertise required to gain

the edge over rivals.
 Downsize operations, cut organisational layers and cut the extra
fat to survive in a competitive world
 Collaborate and achieve teamwork
 Relocate work from the office to the home
 Internet and intranet revolution

3-5
How to deal with a human resource

surplus situation?
Why? Consequences? Managing Survivors of
downsizing
 Automation  Cuts payroll expenses  Bitterness, anger, disbelief
and shock need to be
 Restructuring  Eliminates extra layers
handled properly
 Mergers  Improves functioning if
 Give information as to why
firm’s product and
the action had to be taken
service profile is good
 Acquisitions  Shocks those left out  Tell how it is going to help
the firm and employees in
 Competitive  Shattering impact on the long run.
Pressures employee motivation and
morale if not managed
properly

3-6
Role of HR in a virtual organisation
A virtual organisation is a network of companies or employees

connected by computers. Virtual workers work from home, hotels, their
cars, or wherever their work takes them. The human resource function
plays a unique role in a virtual organisation:
 Psychological fit: The lack of face-to-face interaction in a virtual
organisation, virtually compels HR professionals to determine the
psychological fit between different units initially.
 System alignment: Given the lack of physical proximity, it
becomes even more critical that the organisation's mission, vision
and measures be aligned and that all parties are familiar with these
issues; the HR function can play an important role in this task.
 Reconsider rewards: In a virtual unit, very few permanent
positions exist. In many cases, the organisation will be staffed with
workers having different motivational forces. So rewarding each
entity in an effective way becomes an important job.
Cont…

3-7
Role of HR in a virtual organisation
 Reconsider staffing needs: In a virtual organisation, most

employees work on a contractual basis. Finding people with
requisite skills, knowledge and motivation levels becomes an
important activity.
 Build partnerships: Virtual, teams have to be built from scratch
paying attention to their unique requirements. The concept of
employment needs to be replaced by the concept of 'partnership'
especially when most tend to work independently away from the
permanent employees or owners of the organisation
 Develop leaders: Leaders become the major forces for building
trust, creating a mission and instilling a sense of belonging to the
organisation. HR can play a major role in ensuring that leaders
assume these responsibilities and meet them in an effective way.

3-8
Total Quality Management

Programmes
TQM is a way of creating an organisational culture committed to the

continuous improvement of skills, teamwork, processes, product and
service quality and customer satisfaction.

3-9
TQM: The main ideas
 Do it right the first time

 Be customer oriented
 Make continuous improvement a way of life
 Build teamwork
 Empower people
 Create a climate of trust, an atmosphere for innovation

3-10
Total Quality HR Approach
The Total Quality HR Approach is all about employee participation

and empowerment, carried out in a sincere and wholehearted
manner. Rewards are designed to meet employee needs.
Employees are treated like customers. 360 degree appraisals are
carried out before picking up the best performing teams. Small
ideas and improvements are encouraged.

3-11
Quality snaps of Indian companies
Name of Company Efforts toward TQM

1. Indo-Gulf Fertilizers Ltd Upgrading technology; training people; monitoring cost, quality
and delivery criteria; participative management, HRD; ISO 9002
Certification, first fertilizer company to get this in India;
Shaktiman Krishi Seva Kendras in UP, Bihar and West Bengal.
2. Bharat Heavy Electricals Ltd First to get ISO 9001 certification, in Dec 93; Strict metal parts
(BHEL) quality control; 100% checking of insulators for testing their
strength; strict quality assurance tests; high quality testing labs,
etc.
3. TELCO (Lucknow) SUMO model Jeeps manufactured here according highest
priority to ISO 9000 certifications; training and self-inspection
given top priority.
4. Philips India Ltd Implemented TQM in 1995; first step was moving toward
international quality system standards ISO 9000; total employee
involvement; creation of self managing mini, micro and mega-
teams; got the European Quality Award; Kaizen and suggestion
schemes introduced followed by rewards and recognition
system; regular surveys of employee motivation levels
accompanied by customer surveys

3-12
Benchmarking
Effective implementation of TQM requires benchmarking. The

essence of benchmarking is striving to be the best of the best in one’s
area of operations. It is a continuous process of measuring products,
services and practices against the toughest competitors or industry
leaders with the aim of mutual improvement.
Reengineering
The primary focus of TQM is on continuous improvement or ongoing
incremental change. Reengineering is all about achieving this.
Actually speaking, reengineering takes place when more than 70 per
cent of the work processes in an organisation are evaluated and
altered. The focus is on simplifying operations and making them more
efficient and customer oriented.

3-13
Essentials of reengineering
 Give people a mission; a clear view of how to achieve that mission.

 Either serve the customer superbly or don’t even try.
 Change is the way of life. It is not a process, it is a value.
 Technology is never really a problem. The problem is how to use
technology effectively.
 The wrong answer rarely kills you. What it does is waste time.
 The weak link in reengineering is will.
 Once people catch on to reengineering, you can’t hold them back. It’s a
lifetime opportunity.
 In India TELCO, TISCO, L&T, Ranbaxy and Crompton Greaves have
successfully brought about radical changes through Reengineering.

3-14
Flexible Manufacturing systems
It is the integration of computer aided design, engineering and

manufacturing to produce low volume products at mass production
costs. In such a scenario, employees need to acquire skills and get
trained constantly. One should be capable of handle a variety of
tasks.

3-15
Economic, Political And Social

Challenges And HR
Now-a-days, people, goods, capital and information are moving

around the globe as never before. Global competition is making
every firm to think in terms of gaining an edge over rivals by
producing high quality goods at a very competitive price. This is
where the ‘people’ dimension comes into being. Incentives,
favourable work climate, team spirit, freedom to think and act
independently, and a host of other HR initiatives are needed to
keep talent from flying away.

3-16
What HR managers can do ?
 Use workforce skills and abilities in order to exploit environmental opportunities and
neutralise threats.
 Employ innovative reward plans that recognise employee contributions and grant
enhancements.
 Indulge in continuous quality improvement through TQM and HR contributions
(training, development, counselling, coaching etc.).
 Utilise people with distinctive capabilities to create unsurpassed competence in
an area (Xerox in photocopier, 3M in adhesives, Telco in trucks, Britannia in
biscuits, Nestle in coffee, McDonald’s in fast foods, etc.).
 Decentralise operations and rely on self managed teams to deliver goods in difficult
times (Motorola is famous for short product development cycles. It has quickly
commercialised ideas from its research labs).
 Lay off workers in a smooth way, explaining facts (IBM, Kodak, Xerox, AT&T,
Steel and Textile firms in India etc.) to unions, workers and other affected groups.
HR generally plays a key role, these days, in planning and implementing corporate
downsizings, and then in maintaining the morale of the remaining employees.

3-17
Political factors
 Political stability
 Formation of new political parties
 Influence of politicians over Productivity linked wage agreements
 Political parties sympathetic to trade unionism
 Opposition to VRS schemes, downsizing operations, restructuring
exercises.
 Freedom to show the door to unwanted people
Social factors
 Conducting business in a socially relevant and responsible way.
 Hire qualified people or hire inexperienced local people and train them
to avoid trouble?
 Helping economically poor people, unemployed, underprivileged ones,
etc.

3-18
Local and government-related

factors
 Meet legislative requirements
 Offering jobs to certain sections of local community
Trade unions
 Demands for higher wages, better working conditions, incentives,
benefits, services

3-19
MANAGING WORKFORCE DIVERSITY

The workforce is becoming increasingly diverse now and organisations
are doing their best to address employee concerns and to maximise
benefits of different kind to employees with diverse educational,
cultural and religious backgrounds. The diversity issues, mainly,
include the following:
 Composition
In terms of age, caste, education, culture, region, religion
 Minority groups
 Economically backward groups
 Displaced persons
 Child labour
 Contract labour
 Women employees

3-20
Ways to cheer up women employees
 Provide alternative career paths

 Offer extended leave facilities so that they can meet their pressing
commitments according to their convenience
 Allow female workers to create their own schedules and process
work at home
 Create flexible work arrangements
 Permit job sharing especially in case of relatively independent
tasks such as filing, faxing, word processing, photo copying etc.
In order to benefit from diversity, managers should recognise the

potential concerns of employees and make sure that the exchange
between the organisation and employees is mutually beneficial and
satisfying.

3-21
INTERNAL ENVIRONMENT AND HR
Organisations are also influenced by a variety of internal factors

relating to strategy, culture, structure etc.
 Mission and Strategy

 Internal Policies
 Organisational Culture
 Organisation structure
 Human resource systems

3-22
Designing appropriate HR systems
Issue Focus on
 Nature of employment : Job/Career
 Recruitment : Internal/external/both
 Selection : Merit/other considerations
 Training and employee : 6 months/yearly
development actions Regular/irregular/need based
 Degree of participation : Top down/bottom up
 Incentives : Individual merit/group output
 Job security : Lifelong employment/need-based jobs
 Employee welfare : Be a model employer (offer those that
are needed by law.)

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