Environment of Human Resource Management

It is performed in internal and external environment of an organization.

Internal Environment

It consists of organizational objectives, policies, formal structure and human resource system.
Objectives of HRM are derived from the organizational objectives. Jobs are designed and analysed on the basis of formal structure. Manpower career planning are based on organizational planning.

External Environment

Changes in the environment of an organization exercise a significant influence on its personnel. The main environment factors are descried below.

Economic: Low growth rate inflation and growing unemployment can cause economic problems.
If there are problems in Capital output and capital employment ratio may lead to significant influences on wage and salary levels.

Technological: Technological changes have advanced the gap between factory work and office work. Job content and social relations among employees are changing. Job performance has dependent on dexterity in handling machineries rather than on craft skills. Individual pride in work has been lost due to increasing interdependence. The situation calls for new organizational relations and different personnel techniques.

Political: Independence and democracy increased the expectations of working class. Government has enacted a plethora of laws to regulate working conditions and employment relations. The hold of political parties on trade unions has created problems of multiple unions and union rivalry.

Socio-Cultural: Social values, occupational structure, religion and such other socio-cultural factors influence the human resource management. Unionisation of employees has created pressures for frequent increase in pay level and benefits. In many organizations unions have usurped managerial authority.


The internal Environment must match with the External Environment.