Module 1
AGENDA
• HR environment
• HRM in knowledge economy
• Concept of SHRM
• Investment Perspective of SHRM
• Evolution of SHRM
• S t r a t e g i c H R v s . Tr a d i t i o n a l H R
• Barriers to strategic HR
• Role of HR in strategic planning
HR ENVIRONMENT
▪ The HR environment refers to all the factors that directly or indirectly affect the
performance of the Human Resource Management (HRM) department.
▪ These factors can be part of the internal or external environment of an organization.
▪ The HR environment includes concepts, viewpoints, work culture, attitudes, skills,
productivity, and industrial relations related to HR practices
TYPES OF HR ENVIRONMENT
Internal factors External Factors
Organizational Strategy Economic Conditions
Legal and Regulatory
Organizational Culture
Factors
Management Practices Technological Advances
Workforce Characteristics Social and Cultural Factors
Internal Policies and
Globalization
Procedures
Technology and
Competitive Landscape
Infrastructure
MANAGING HR ENVIRONMENT
To effectively manage the HR environment, HR professionals need to:
1. Conduct regular environmental scanning to identify and respond to external and internal
changes.
2. Engage in strategic planning to align HR initiatives with organizational goals.
3. Foster a flexible and adaptive HR function that can quickly respond to new challenges and
opportunities.
4. Continuously develop HR competencies and capabilities to manage the evolving HR
landscape.
KNOWLEGDE ECONOMY
▪ The knowledge economy refers to an economic system in which the generation and
management of knowledge play a predominant role in the creation of wealth.
▪ It is characterized by a focus on intellectual capabilities rather than physical inputs or
natural resources.
▪ Unlike traditional economies that rely on physical resources like land, labor, and
capital, the knowledge economy is centered around the creation, distribution, and
utilization of knowledge to generate wealth.
CHARACTERISTICS OF KNOWLEDGE ECONOMY
▪ Innovation and Creativity
▪ Intellectual Capital: Human capital (skills, knowledge, and experience of employees), structural
capital (intellectual property, patents, and processes), and relational capital (customer
relationships and networks), is a key asset in the knowledge economy.
▪ High-Value Services: The economy is often dominated by high-value services such as finance,
healthcare, education, IT, and professional services.
▪ Technology-Driven
▪ Globalization: The knowledge economy is highly globalized, with information and expertise
flowing freely across borders.
▪ Lifelong Learning: Workers need to constantly update their skills to keep up with the rapid pace
of technological change and to remain competitive in the job market.
EXAMPLES OF KNOWLEDGE ECONOMIC
COMPANIES
▪ Companies like Google, Microsoft, and Apple are prime examples of the knowledge
economy. They invest heavily in R&D, employ highly skilled workers, and rely on
intellectual capital to drive their business success.
HRM IN KNOWLEDGE ECONOMY
▪ Talent Management – Attracting & retaining talent
▪ Continuous Learning & Skill development
▪ Knowledge Capture, Sharing & Transfer
▪ Innovation based performance management system
▪ Flexible Work Arrangements
▪ Diversity and Inclusion
▪ Proactive Change Management
▪ Employee Empowerment & Engagement
CHALLENGES OF HRM IN KNOWLEDGE ECONOMY
➢Managing Knowledge Workers: Knowledge workers often have high expectations for
autonomy, development opportunities, and recognition, requiring HRM to create supportive
and flexible work environments.
➢Rapid Technological Change: Keeping the workforce up-to-date with the latest technologies
and industry trends requires continuous investment in learning and development.
➢Balancing Flexibility and Accountability: While flexibility is crucial, HRM must also ensure
that employees remain accountable and that organizational goals are met.
➢Cultural Shifts: Adapting to a knowledge-based culture where innovation and creativity are
prioritized may require significant changes in organizational culture and management
practices.
DIFFERENCE BETWEEN HRM & SHRM
SHRD (Strategic Human Resource
Category HRM (Human Resource Management)
Management)
Administrative functions (e.g., hiring, Aligning HR practices with long-term
Focus
payroll) business goals
Proactive, anticipating and planning for
Approach Reactive, handling issues as they arise
future needs
Time Orientation Short-term, operational Long-term, strategic
Supportive, focused on compliance and Partnering with management to drive
HR’s Role
procedures business strategy
Decision-Making Centralized, top-down Decentralized, collaborative
DIFFERENCE BETWEEN HRM & SHRM
SHRD (Strategic Human Resource
Category HRM (Human Resource Management)
Management)
Employee Focus on continuous development and
Limited to basic training and compliance
Development strategic talent management
Measurement of Based on HR metrics (e.g., turnover, cost per Based on business outcomes (e.g.,
Success hire) innovation, market share)
Change
Responds to change when necessary Anticipates and leads change
Management
Flexible and adaptive to changing business
Flexibility Rigid policies and procedures
needs
Focus on filling positions and maintaining Focus on acquiring, developing, and
Talent Management
headcount retaining top talent
DIFFERENCE BETWEEN HRM & SHRM
SHRD (Strategic Human Resource
Category HRM (Human Resource Management)
Management)
Encourages innovation and continuous
nnovation Limited, focused on maintaining status quo
improvement
Advanced, leveraging technology for
Use of Technology Basic, primarily for administrative tasks
strategic advantage
Risk Management Compliance-focused, risk-averse Balances risk with strategic opportunities
Agile, responsive to market and
Responsiveness Slow, bureaucratic
organizational changes
EVOLUTION OF SHRM
Strategic
HRM
Human (2000-Present)
Resource
Personnel Management
Management (1980-1990)
Labor (1945-1979)
Manager
Welfare (1914-1939)
Officer
(1890-1913)
INVESTMENT PERSPECTIVE OF SHRM
Investment Area Sub Category Impact
Training and development, leadership Increased productivity, innovation, and
Human Capital programs, employee wellness initiatives, competitive advantage through a highly
and career development paths. skilled and motivated workforce.
Employer branding, competitive Lower turnover rates, better employee
Talent Acquisition compensation packages, employee engagement, and the ability to attract
and Retention benefits, and creating a positive work high-caliber candidates who contribute to
environment. business growth.
Enhanced organizational resilience, the
Innovation and Innovation-driven culture, change
ability to adapt to market changes quickly,
Change management training, and continuous
and fostering a culture of innovation that
Management learning programs.
drives business growth.
Investment Area Sub Category Impact
Employee Employee recognition programs, work-life Higher levels of employee loyalty, lower
Engagement and balance initiatives, and feedback absenteeism, and increased overall
Satisfaction mechanisms. performance.
Diversity training, inclusive hiring Enhanced creativity and problem-solving,
Diversity and
practices, and support for underrepresented broader market reach, and a stronger
Inclusion
groups. employer brand.
Improved efficiency in HR processes,
Technology and HR Information Systems (HRIS), data
better talent management insights, and
HR Analytics analytics tools, and AI-driven recruitment.
more strategic decision-making.
Compliance training, employee relations Reduced legal costs, improved employee
Risk Management programs, and crisis management relations, and enhanced organizational
planning. stability.
BARRIERS TO STATEGIC HR
Lack of Top Management Support
Inadequate HR Competencies
Resistance to Change
Short-Term Focus of organization
Poor Communication
Lack of Alignment Between HR and Business Strategy
Resource Constraints
Inconsistent HR Practices
Legal and Regulatory Constraints
Technological Challenges
