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

External Environment Factors 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 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)

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.)

a. Organization-related outputs Goal-achievement 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)

Forces in the internal environment are controllable by HRM 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, socio-cultural forces

Government Law and Regulation 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.

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

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

Competitiveness Effective workers? Quality services or good? New technology? Lower cost products? HRM can be a competitive advantage

Composition & Diversity of the Labor Force Women Minorities Older Employees

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

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

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

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

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.

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

Group Work Directly related to the success of HRM activities Work-group participation in designing & implementing HRM is essential

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