HRM is an integral part of the organisation; it is responsible for how an organisation harnesses its human resource. It doesn't mean emphasizing just the different aspects like recruitment or employee management alone since HR is responsible for having the right people in the organisation, motivating them, and keeping them productive throughout their stay. However, while major internal processes and decisions play a role, there are several external factors that can greatly affect how HR functions. More often than not, these external factors are beyond the control of HR managers but must be understood and navigated properly for the entire organisation.
This article is intended to talk about six external factors that influence HR management most significantly. By recognising these external features, HR professionals will better plan for productivity and anticipate challenges as well as defining their decision-making process.
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It is the condition of the economy which is one of the most powerful external forces in determining a person's human resources. Whether the economy is booming, stagnant, or in recession, all the processes from hiring and training practices to compensation and job security are all pervaded by its influence.
Economic environment affects recruitment and retention strategies. A manager would tune his practices depending on whether an organization requires hiring a huge number or downsizing its workforce. HR must also position itself regarding compensation strategies and should potentially offer more than just financial incentives such as more time, flexible work hours or other options during downturns in the economy.
The majority of their activities are regulated by laws and policies. State interventions regarding labor laws and safety standards as well as any aspects of compensation, benefits, and discrimination policies are important in human resources management.
The impact on HR is the result of legal or regulatory changes, which then may have an impact on the company's hiring practices, employee benefits, or workplace policies. HR managers must keep abreast of the latest labor laws and regulations and ensure that their organisation is compliant with them. Noncompliance means that organisations may be taken to court or penalised, thus making compliance a priority for HR.
Technology significantly impacts all fields, including human resources, in a vast number of dimensions across decades, from hiring automation to new tools for performance and productivity management.
If new technologies and tools evolve, so must HR's learning in adapting information and knowledge to build efficiency in the operations and keep pace with the expectations of society from these modern workers. Understand that emerging technologies could help managers keep abreast of what new technologies bring for new purposes in recruitment, performance management, or employee engagement. These changes cannot be adopted in the workplace because they lead to ineffectiveness or a competitive disadvantage.
Demographic changes such as age, gender, ethnic descent, or educational level changes are of great concern for HRM. For example, (see reference for a case on the aging population) this particular situation appears in most developing countries which, as a result, has a higher number of older workers in the workforce for almost all developed countries. Therefore, HR has to focus on retaining experience and would boost flexible working or benefits packages for their employees to attend to the needs of older workers.
Changes in the demographic structure of a workforce can affect recruitment, employee retention, and training patterns. Such changes must be understood by HR managers to develop policies that not only attract talent from diverse pools but also create a work environment where all employees are inclusive and supportive. HR needs to develop to have different initiatives that would cater to specific needs for different demographic groups, like mentoring programs for younger employees, flexible work hours for people with family responsibilities, etc.
In the context of this hyper-globalisation world, the whole meaning of human resource management has changed. The most significant challenge for HR functions is now how to manage an expanding multinational workforce. HR managers often work with individuals from different cultures, countries, and legal systems. The fact that they need to manage employees across the world creates many communication complexities.
Globalisation makes HRs rethink how they manage their people. HR managers have to come up with international talent management strategies, training on cross-cultural communication, and multiple compliance with international labor laws. HR, without doubt, garners greater attention since it builds a more important international team and manages a vast diversified workforce as business organizations are venturing into new areas.
HR practices are subject to societal values, attitudes, and expectations. Such changing social trends like work-life balance and healthy work-life related issues compel the HR department to revisit its policies that treat their people. While the present employees put forward their demand for a flexible working arrangement, such as telecommuting or flexible hours, arguing it as a priority compared to a more considerable paycheck, observance of social movements and awareness of gender issues, racial diversity, and mental health forced the way HR policies and procedures have been adjusted.
Changing social attitudes concerning work have been witnessed throughout the years. The focus is now put towards employee participation and cultivating an aspect of positive work culture, as most organizations are currently trying to achieve such. The people's demand for proposing companies has made HR seek more people who can have their values defined by the organisation mission.
The HR department has to keep on adapting to the changing realities in the organisation. Employees are being expected to be involved in every facet of the company. Mental health and well-being have begun giving rise to needs to which human resources departments ought to find new solutions. Another thing is that HR should ensure that diversity exists in the workplace and that inclusivity policies should be worked out for every employee.
It can be inferred that external environments like the economic environment, changes in laws and regulations, technology, demographics, globalization, social and cultural factors strongly impact Human Resource Management (HRM). Moreover, these touch the activities of HR departments, from recruitment and talent management to compensation and employee engagement. So, completely adapting and proactively responding to these changes are the very important qualities that HR professionals should have while encountering these challenges. Therefore, The British Academy for Training and Development brings you programs in affecting HRM for you to achieve your career aspirations.