Environmental influences are factor that impact the Human Resource Management Operations within an organization. Factors influencing Human Resource Management are not static. These factors are constantly changing and HR Managers must continually monitor these internal and external factors and make corresponding changes in the HR strategy.
a) Government Regulations: Government regulations impact all HR activities. The HR Department of an organization needs to constantly monitor its policies so that they adhere to all applicable laws. These regulations impact all processes of the HR Department like hiring, compensation and benefits, training, retrenchment, etc. The organization would be heavily fined if the HR Department fails to comply to the rules and regulations of the Government.
b) Economic Conditions: The current economy is one of the biggest influences on an organization’s HR practices. Economic uncertainty not only affects an employer’s ability to pay its employees at competitive rates but also impacts its ability to hire new employees and expand its business. Some programs might need to be shut down and this would cause mass layoffs in the industry. The HRM team must work in cross-functional teams to get a better understanding of the economy and design its processes to counter the challenges an economy throws at the organization.
c) Competition: Competition in an industry is not only restricted to the market share, but also includes the share of the human resources market. An organization wants to recruit the best talent available in the market and achieve an upper-hand in terms of expertise and capabilities. A new company entering the market might needs to invest in employer branding to attract qualified talent. On the other hand, an established company with a history of employee-friendly practices need not advertise for new roles because supply would always exceed demand in its case. Employee retention is a key focus area in all organizations.
d) Technology Advancements: When new technologies are introduced, it becomes necessary to train employees to ensure efficient implementation. Another challenge imposed by the new technology is that it might make labour obsolete and the HR Department would look to downsize in such a case.
e) Employee Relations: Today, the law has given enough power in an employee’s hands. The law protects an employee from unethical practices and ensures fairness in treatment. Labour unions have the power to bring the employer to the table and negotiate about the terms and conditions of employment.