Factors Affecting Human

Resource Management
By : Jacqueline
 Human
Resource

Hiring, maintaining a
budget, recruiting,
managing benefits,
ensuring employee
satisfaction, implementing
a company culture, and
training new hires.
 Human resource management
Human resource management is organizing, coordinating, and managing employees
within an organization to carry out an organization's mission, vision, and goals. This
includes recruiting, hiring, training, compensating, retaining, and motivating
employees.

Human resource management is the strategic and coherent approach to the effective
and efficient management of people in a company or organization such that they help
their business gain a competitive advantage. It is designed to maximize employee
performance in service of an employer's strategic objectives.

Human Resource Management is the set of organizational activities

“

directed at attracting, developing and maintaining an effective workforce.”

- Ricky W. Griffin
Employees are the biggest assets of any organization, which makes Human
Resource Management a domain that needs to be highly effective in order to
make the employees as well as the organization strive towards success.

It is because of the complexity of Human Resource Management that the HR

department is one of the key departments in any organization. A new age
human resources software like Digital HRMS is designed to help the HR
department take the right steps towards successful Human Resource
Management.
There are two categories of environmental factors-external and internal.
• External factors are all those factors which lie outside an organization and affect its
working, including human resource management.

• Internal factors are all those factors which lie within the organization and affect human
resource management.

Organization’s
Organization's Organizational
Trade Unions Financial
Strategy Culture
Position
 External or Environmental Factors
• Economic factors : Economic factors are those factors which give shape and form to the
development of economic activities.

Factors that influence human resource management practices are :-

• Organizations should differentiate between workforce and

population because only a part of the population is eligible to
Population & work.
• Eligible workforce can be divided into two groups- the
Workforce workforce reserve - those not working for economic gain and
those who constitute workforce.

Workforce • (a) Occupation — qualifications and skills required,

• (b) Geography — potential employees are willing to relocate or
Market commute,
• (c) Other employers that compete with similar products and
Condition services.
 • National income, particularly measured in terms of per capita
National Income income, affects wage/salary structure at the macro level.

Inflationary • When a country faces inflationary pressures, its cost of living

index goes up forcing employers to pay more to employees.
Pressures

• Socio-cultural factors : From human resource management point of view,

attitudes, beliefs, desires, expectations, and customs of the society at a given point of
time are important.
These factors determine- (i) expectations of the society from organizations, (ii) views
towards social status of jobs, (iii) views towards achievement of work, (iv) workforce
mobility, and (v) role of unions in managing human resources.

• Technological Factors : Technological factors consist of sum total of knowledge

providing ways to do things. These include inventions and techniques which affect the
ways of doing things, that is, designing, producing, and distributing products and
services. Technology affects an organization in two ways-
(i) Defining Nature of Jobs
(ii)Affecting Human Resource Management Practices

• Political-Legal Factors : Political-legal factors include political system, role of

government in business, various government policies related to business operations,
laws formulated by governments, both central and state levels .
Internal Or organisational Factors

The factors lie within the organization and affect human resource management practices.
Overall perspective for the functioning of human resource management is provided by
numerous organizational factors - organization’s strategy, organizational culture, trade
unions, and organization’s financial position.

• Organization’s Strategy : Every organization sets its strategy either explicitly or

implicitly. Strategy is a way in which an organization, reacting to its environment,
deploys its principal resources and marshals its main efforts in pursuit of its purpose.

HR strategy is formulated within the overall framework provided by corporate level and
business level strategy. Depending on the nature of corporate strategy, human resource
management practices are followed.
• Organizational Culture: There are two types of elements which define the culture of
an organization- abstract elements and material elements.

Abstract elements are internally- oriented and include values, beliefs, attitudes, and
feelings.
Material elements are externally- focused and include buildings, personnel dresses,
products, etc.

• Trade union : Trade union in an organization is a separate entity still it has been
treated as an internal factor because organization’s employees (particularly operatives)
are members of the trade union. Trade union affects recruitment of employees, their
development, compensation, maintenance, and industrial relations.

Bargaining position of a trade union depends on the strength of its members as well as
support of trade unions of other organizations at the same location and apex body of trade
unions at national level.
• Organization’s Financial Position : The ability to pay the wages and salaries, funds
for retraining human resources, etc., are affected by an organization’s financial position
and its cash flow.

Generally, highly profitable periods bring higher bonus while unprofitable periods may
not result in any bonus (except the statutory bonus).

When financial difficulty is experienced, the axe falls first on the employees. This is
evident by substantial employee layoff during the economic slowdowns. On the other hand,
employee stock option, profit sharing, performance incentives, etc. are the result of sound
financial position.
Factors Affecting Human
Resource Planning
 Human Resource Planning
Human resource planning is a technique company uses to balance its flow
of employees and prevent situations such as team member shortages or
surpluses.
Human resource planning is a process that identifies current and future
human resources needs for an organization to achieve its goals.
.

Before an organization undertakes Human Resource Planning, there are

many factors that have to be considered by the managers. These factors
can be classified as external factors and internal factors. The external
factors are those factors that are beyond the control of the organization.
The internal factors are those factors that are company-specific
External Internal
Factors factors
Company
Government
Policies &
Policies
Strategies

Technological Culture of the

Advancement organization

Environment of Quality & Skills

business Required
 External factors : Things outside a business that will have an impact on its success.
Their impact can be positive or negative.

• Government policies : The Government policies regarding factors such as labor

welfare, industrial policy, wages and remuneration, the reservation policy for different
communities, and other measures affect the human resource policy of the organization.
This in turn has an influence on the way the organization undertakes Human Resource
Planning.

• Technological Advancement : The technology which is used in the organization for

production improves, the skills of the employees who are working in the organization
also have to be updated.

• Environment of Business : The factors such as competition, the situation in the labor
market, the taste and preference of the customers, and the current trends in the domestic
and international markets shape the way in which the company under- takes its activities.
 Internal Factors : Those factors that are company-specific and are those that you
can control.

• Company Policies & Strategies : Company policies and strategies influence the
way in which the company would undertake its activities in order to achieve its
objectives. This also have an influence on which way the human resources would be
utilized by the company.

It is very essential that the policies, strategies and Human Resources policies of the
company should be in sync with each other. This would help the organization to achieve its
goals in a smooth manner. The Human Resource Manager should keep in mind the
objectives of the organization while designing the policies of recruitment, selection, and
training strategies as these are critical for performing various activities in the organization.
• Culture of the Organization : The culture of the organization includes the set of
beliefs, values, thoughts, assumptions, and practices shared by the people of the
organization. The culture of the organization shapes the personality of the members of
the organization as they influence the thoughts, emotions, motives, attitudes, and
behavior of the people.

When the culture of the organization alters in any manner due to any reason such as
induction of new employees, promotion of certain employees, creation of trade unions, etc.
it influences the Human Resources policies as well as Human Resources plans which are
formulated by the organization.
Quality and Skills Required : IT is very important that the manager considers the
number of employees and the nature of skills required in the employees. Factors such as the
number of personnel required, skills required, location of jobs, and the structure of the
organization influence the Human Resources policies and plan formulated.