System Model of HRM
• System composed of interrelated & interacting parts to achieve desired goals
• System approach to HRM combines itself with business strategy
• Many firms in developing countries are facing problems due to their traditional practices of managing people
• The system, functions, components and objectives of modern organizations differ from traditional organizations
• HRM system is linked with organization performance, organization structure and strategic objectives of the organization
• Open system : consists of input-processing-output & feedback components
• Operates within internal & external environment
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HRM System
External Environment Factors
Government law & regulation, Union, Eco condition, Competitiveness,
Composition of the labor force, Geographical location of the organ, Tech.
Threats and Opportunities
Inputs
Human Energy & competencies
Organizational
Plan
HR Plan
Mgmt Inventory
Job Analysis
Labour Market
Processing
Acquisition
Development
Ulitization
Maintenance
Outputs
Organizational related output
Employee related output
Feedback
Internal Environment Factors
Strategy, Goals, Culture, Nature of the task, Group work, Leader's style & experience
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Strengths and Weaknesses

HRM System
1. Inputs of HRM
• Human energy & competencies (physical strength, knowledge, skills, attitudes, experiences etc.)
• Organizational plan (organizational goals, strategy, target)
• Human resource plan (matches future HR demand with supply & indicates the HR requirements)
• Management inventory (record of HR currently available in the organization)
• Job analysis (specifies job requirements, job specifications)
• Labor market (source of external supply for quality human resources)
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HRM System
2. Processing of HRM a. Acquisition
– Ensures entry of right number of people at the right place at the right time in the organization
– Consists of recruitment, selection & socialization b. Development
– Ensures proper competencies of employees to handle jobs
– Analyzing development needs
– Employee training
– Management development
– Career development c. Utilization
– Ensures willingness of employees for boosting productivity by doing jobs effectively
– Consists of motivation, performance appraisal, compensation etc.
d. Maintenance
– Ensures retention of competent employees in the organization
– Labor relations (employer-employee relations & employee discipline, grievance handling)
– Employee welfare (to promote employee safety, health, social security, etc.)
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HRM System
3. Output a. Organization-related outputs
• Goal-achievement
• Quality of work life (QWL) (Quality of relationship between employees & the total working environment of the organization.)
• Mechanisms of QWL:
– Learning & development
– Recognition
– Autonomy
– Intrinsic/extrinsic rewards
• Productivity
• Profits
• Readiness for change b. Employee-related outputs
• Commitment (achieved through trust, understanding, communication, loyalty etc.)
• Competence (changes in the environment & assume new roles)
• Congruence (related to goals, harmony between individual & organizational goals)
• Cost effectiveness (high cost-effectiveness)
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HRM System
4. Feedback
– Provides information to redesign HRM inputs & processing based on output effectiveness
5. Internal Environment
– Forces in the internal environment are controllable by HRM
– Provide strengths & weaknesses
– They are organizational goals, policies, structure, reward system & organizational culture
6. External Environment
– Forces non controllable by HRM
– Provide opportunities & pose threats
– They are technology, politics/law, labour unions, economic forces, sociocultural forces
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Internal & External Environment of HRM
A. External environment (outside the organization)
Government Law and Regulation
– Affects organization directly
– Decisions about hiring, promotion, diversity, evaluation, employment opportunity, discrimination, compensation, benefits regulation, safety laws etc.
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Union
– An organization that represents the interests of employees
– Shapes the HR policies & practices
– Union representatives are included in major HR decisions
– Recruiting, selection, promotion, compensation, etc.
– Not restricted only to the blue-collar workers
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Economic Conditions
– Economic devt. of a country gives priority to the proper mgmt. of HR
– Provides career & skill devt. opportunities
– Local companies compete with foreign ones & thus local companies reform their work processes
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Competitiveness
– Effective workers?
– Quality services or good?
– New technology?
– Lower cost products?
– HRM can be a competitive advantage
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Composition & Diversity of the Labor Force
– Women
– Minorities
– Older Employees
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Geographical Location of the Organization
– Rural, urban area?
– Kinds of workers available
– Educational factors
– Behavioral factors (attitudes)
– Legal-political factors (stability, racists etc.)
– Economic factors (structure, inflation, constraints on ownership etc.)
– Socio-cultural factors
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Technology
– Technology is a major factor in deciding about HR policy choices
– Use of sophisticated & efficient technology
– Increased the quality & volume of the products/services
– Reduced the price level
– Coping with the technological environment demands for knowledge workers
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B. Internal Environmental Influences
Strategy
– What an organization’s key executives hope to accomplish in the long run
– Selection of a particular HR strategy, policy & practice
– Business firms differ in their HR strategy due to different business environment & competitive strategy
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Goals
– The goals of organizations differ within & among departments
– Differences in the importance of goals
– E.g. profit goals are emphasized, HRM goals are paid only minimal attention
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Organization Culture
• System of shared meaning held by members
• A firm’s way of doing business
• How it treats customers & employees
• Autonomy of the departments
• Degree of employee loyalty expressed
• A common value system
• Strong or weak culture?
• Impact on the behavior, productivity, expectations of the employees
• E.g. clear guidelines on punctuality, customer service etc.
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Nature of the Task
• Degree of knowledge & ability to use IT
• Degree of empowerment
• Degree of physical exertion required
• Degree of environmental unpleasantness
• Physical location of work
• Time dimension of work
• Human interaction on the job
• Degree of variety in the task
• Task identity
• Task differences & job design
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Group Work
– Directly related to the success of HRM activities
– Work-group participation in designing & implementing HRM is essential
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Leader’s Style and Experience
– Experiences & leadership style of the operating manager affects HRM activities
– Direction, encouragement, authority to evoke desired behaviors
– Facilitates interactions that occur within work groups
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