External Environment of an Organization Influence HRM

External Environment of an Organization Influence HRM

“HRM Environmental” is the process by which strategies monitor the environmental sectors to determine opportunities for and threats to their firm regarding human resource.

Environment refers to all external forces, which have a bearing on the functioning of business. The environment includes factor outside the firm, which can lead to opportunities or threats to the firm. The external forces are physical, technological, social, political and legal, labour market and economic elements. The internal forces or elements are unions, organizational culture and conflict, professional bodies.


External Forces

External forces include political-legal, economic, technological and cultural factors that influence of which on HRM is considerable.
1. Political-legal Forces: The political environment covers the impact of political institutions on the HRM department. In a democratic political set up, there are three institutions, which together constitute the total political environment. They are;

The legislature-also called parliament at the central level and Assembly at the state level is the lawmaking body. The plethoras of labour acts, which are in force, are enacted by the legislature. The executive popularly known as the government is the law-implemented body. The legislature decides and the executive acts. Above these two is judiciary, which has the role of a watchdog. The main function of the judiciary is to ensure that both the legislature and the executive work within the confines of the constitution and in the public interest.

The interface between political environment and labour takes place through an array of labour laws. All HR planning, recruitment and selection, placement, training and development, remuneration, employee relations, and separation are conditions constitutional provisions.

2. The Economic Forces: The current state of the economy, can affect how a company performs. The rate of growth in the economy is a measure of the over all change in demand for goods and services. Other economic influences include;
  • Taxation level
  • Inflation rate
  • The balance of trade and exchange rate
  • The level of unemployment
  • Interest rates and availability of credit government subsidies.
One should also look at international economic issue, which could include:
  • The extent of projectionist measurer
  • Comparative rate of growth, inflation, wages and taxation.
  • The freedom of capital movement
  •  Economic agreement
  • Relative exchange rate.
3. Technological Forces: With the advent of technology, jobs tend to become more intellectual or upgraded. A job hitherto handled by an illiterate or unskilled worker now requires the services of an educated and skilled worker. The introduction of new technology dislocates worker unless they become well equipped to work on new machines. This makes it obligatory on the part of HRM to train worker and to rehabilitate those who are displaced or cannot be trained. Those employees who pick up and acquaint themselves with new technology, the job will be challenging and rewarding. Worker class, in general, stands to gain through increased productivity, reduced prices and increased real wages all by-products of technological advancement.

Along with upgrading jobs, technology has its impact on Human relations. Technology lays down the requirements for much of the human interaction in organizations. The arrangement of production set up determines who will be near to whom. The workflow determines who need to talk to whom. And since interaction and activity affects sentiments, technology indirectly determines what individuals in large groups will fell and think about one another and about their work situation.

Jobholders will become highly professionalized and knowledgeable. An organization that has adopted the latest technology is flush with scientists.

4. Cultural Forces: Culture creates the type of people who become members of an organization. Culture trains people along particular lines, tending to put a personality stamp upon them. When people with different cultural backgrounds promote, own and manage organizations, they themselves tend to acquire instinct cultures. The attitudes of workers towards work are the result of their cultural background. HRM people in societies that focus on the present, care more for employees on the rolls. Employees are hired and maintained as long as they are useful to the organization and are dispensed with once they cease to be so. American society is an example of this.

Work ethics, achievement needs and effort-reward expectations, which are significant, inputs determining individual behavior, are the results of culture. In the context of an organization, ethics implies hard work and commitment to work. A strong work ethics ensures motivated employees whereas the opposite is true when work ethics is weak.

Achievement needs; too, have a behavioral implication. A person, with a high need to achieve tends to seek a high degree of perusal responsibility, sets realistic goals, takes moderate risks and uses personal performance feedback in satisfying his or her need to achieve.

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