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Human resources department of an organisation deals with both internal and external factors that affect the smooth running of the organisation. The term external environmental factors refer the total sum of all the factors which affect both the organisation and human resources department. Major of these external factors affecting the HR department are
Political factors/union/local government issues
Work force diversity/culture
Innovations in technology
These factors in collectively or in individually can affect the human resources function of an organisation. It is the role of human resources manager to balance the demands and challenges created by these external factors and to achieve the organisational goals in an effective and efficient manner. The following figure shows the range of factors that ought to be included in a fuller assessment in a firm which can influence HR choices.
Social and political factors inside and outside the firm:
Degree of labour scarcity
Expectations and power of employees( including union strategies , where these exist)
Managerial capabilities and politics
Labour law and social norms.
General educational level and vocational training system.
Economic and Technological factors, inside and outside the firm:
Choice of sector and competitive strategy
Nature of the dominant productive technology.
Size and structure of the firm and stages in the industry life cycle.
Quality of business capital
General economic condition.
Management choices in HR strategy
Major factors affecting management choices in HR strategy
(Julie Beardwell,Tim Claydon.2007,Human Resources Management )
The challenges created from the economy ranges to wide extent. It may not be always an economy crisis it may be also an economy growth. Both will affect the human resource of an organisation in different ways. An economical crisis may lead to lay off, job cuts, cutting of allowances, perks. This is absolutely the job of a human resources manager to deal with these situations.
In order to explain the role of the human resources I would like to like to give an example from my industrial experience which I gained when i was working with Hilton hotel in Blackpool, United Kingdom. When the US economic recession came, UK hospitality industry was in the hope that it would not be affected by the recession. But later the effect of recession had come to UK too. And it affected the hospitality sector. Working as trainee in human resource i was able to get a clear picture of the different human resource practices which the company opted to cop up with the situation. As the cash starved managements started looking for cost cutting measures, lay off started to come into action. But the management gave full authority to the human resource department of the hotel to take decision on the matters like whom should be sent home and from which department. Thus the following circumstance created a challenging situation to the human resources manager. As step by step processes they approached this problem. The first step was to find out which departments are not involved in the direct revenue generation. When they analysed the revenue reports of each departments they came to the conclusion that the least revenue generating departments were hotel security wing and kitchen potters. Then the next step was choosing one among them. In Hilton hotel at that time the security job was done by an outside agency so the security employees were not the staff of the hotel. this report from the HR department helped the management to think about an alternative way to run the security department. The management decided to stop the contract with the outside agency and lay off all the employees in the security department. As an alternative they installed more circuit cameras and all supervisors in every department assigned a security officer position. They are been trained by their department and also their job description got changed to present situation. ( personal experience).
As economic crisis economic growth also creates a challenging situation to the HR department. In time of economic growth the turnover of the company can be maximum. People will jump from one to other organisation as there are lots of opportunities in the job market. This will put the HR manager in a challenging situation of maintaining the capable staff and try to reduce the rate of turnover. This is achieved mainly by conducting an exit interview to know the reason why employees are moving to other organisation. Once the HR manager came to know about the reasons they try to negotiate with the employees and solve the problems.
Political factors/union/local government issues
Political factors can be internal or from outside. As we are concern with the external factors here we will look into the different kinds of outside factors affecting the organisation's HR department. It mainly includes the different policies of government or employees union. It can be regard the working time, employee pay, notice and dismissal, health and safety, benefits and holiday, disability discriminations, usability and accessibility and so on. The human resources manager should update his knowledge about all these changes that happen in a day today life. The human resources of an organisation should consider these factors in mind and should do necessary changes in its organisational policies. Political risk also mean social pressures in a foreign country may also affect organisation. 'For example: the American firms in France are under a great deal of pressure to avoid lay off even if they are over staffed.'(Luis R.Gomez-Mejia, David B.Balkin, Robert L. Cardy,2010)
But when we think about the government policies don't think that it always stand for the employees benefits in many cases the government had taken decisions which may affect the employees negatively.
An example for that is the decision of restructuring the NHS from top to bottom by the UK government which at last resulted in job cuts.
Work place diversity
In today's world Concept of globalization growing fast. As the companies are going global human resources managers needs to concern about the expectations of their employees. Most of the multinational companies buy other companies and its employees in different parts of the world in order to expand their business. In such cases the HR department should be aware of the concerns and make sure that the exchange is mutually beneficial to the employee and the organisation. The diversity also refers to the demographic changes like age discrimination, equal opportunity to both genders, rising level of education...etc. The resent accusation on BBC on bases of age discrimination can be considered as an example for this. Apart from demographic changes the cultural difference will also make hassles to the HR managers, because it is the culture that determines the attitudes, beliefs, values and customs of the people in the society. In an organisation the culture effects people reaction to different situations such as leadership styles and reward systems. The HR needs to manage this diversity by being aware of common characteristic as well as each person's identity. It means not just tolerating but supporting, nurturing and utilizing these differences to give the organisation competitive edge.
Innovations in technology
In today's world technology is making firms more competitive. At every second there are innovations taking place. This has made managers less depend on the chain of command approach to organising. Human resources department plays a keen role in any such changes. It is their responsibility to empower workers to make more decisions presumes that they are selected, trained and rewarded to do so. Investment in new technology, capital and for globalisation may increases pressure on the company to lower cost and increase productivity. Among all expenditure labour cost is the largest expenditure of any organisation. So organisation started using approaches such as down-sizing, out sourcing and employee leasing. All these have direct effect on HR policies and practices.
Today's work place scenario needs more strategic and business savvy HR managers. He should be able to function fully in the information knowledge world using its technology. He must also have the emotional intelligence to be able to lead on a psychologically fault line. In order to compete with these external factors the human resources should change the design and conduct of the jobs through flexible working hours, team works and employee suggestion schemes. The HR manager should also ensure that the employees are given proper training to perform work through team work training, inter personal skills, appraisal and information sharing. HR should practice resourcing and development to attract and to keep the right people in right motivation. This helps guarantee of job security, an emphasis on internal selection, and employee attitude surveys with feedback. Practicing all these techniques may help the HR manager to compete with the external factors.