Needs of Continuous Monitoring of Changing Forces in the Environment

Needs of Continuous Monitoring of Changing Forces in the Environment

HRM should anticipate and predict environmental changes, major trends should be identified through environment scanning. HRM environment consists of forces that influence HRM’s ability to achieve goals. Environmental forces greatly affect HRM. HRM should continually monitor the changing forces in the environment. It should be proactive by adapting to the anticipated environmental changes.

Elements of External Environment

Economic and labor market elements of the external environment greatly affect HRM.
  1. Economic conditions and its elements: The economic development of a country indicates that there is a high GDP growth, a number of business activities are ongoing, worldwide business networks are established, information technology is widely used, substantial investment in R and D is made, foreign direct investment (FDI) is increasing. The level of income, the stage of business cycle (i.e. prosperity, recession, recovery, inflationary pressures and fiscal policies of the government affect the compensation and benefit packages of employees. Economic groupings, such as European Union facilitate cross border mobility of human resources. This affects acquisition aspect of HRM. 
  2. Labor Market: A labor market is a geographical area within which people looking for work interact with employers looking for people. The supply of number of educated and trained workforce, number of employed and unemployed people, number of economically active population, increasing number of aging people etc. are some of the characteristics of labor market.

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