External Factors Affecting Human Resource

Feb 7, 2021 | HR

There are many factors that affect daily operations in the human resource function in any organisation. HR professionals need to remain vigilant and be ready to adapt in case any changes occur. HR should have a clear strategy with relation to the following external factors;

Government Regulations

A change in the government will often lead to a change of rules and regulations. There are often new standards set by government that every business and HR department needs to comply with. HR needs to evaluate existing policy and process and should come up with a way of adopting and implementing any new rules. New government regulation can impact with process in many HR functions, for example, hiring, training, compensation, and ultimately firing. The HR department should be careful to follow any new rules as failure to do so can lead to fines or disrupt company operations.

Economic Conditions that affect Human Resource

Technological Advancements

Technology can influence the human resource function positively. This is because technological advancement can make work more efficient. In some cases, improvement in technology can lead to the need for fewer employees, which in turn can lead to a requirement for HR to downsize the number of employees working for the company.

Workforce Demographics

As older generation of employees retire, the human resource departments should look for incentives that will attract talent to the business. Older generations historically were employed under terms that ought to have changed over time due to the dynamics of the job market and this status that might not suit the current job seekers. It’s important to review things like compensation packages as well as working environment, for example flexible working to ensure it is in line with this new generation of employee.

Social factors

The social structure of a society and their belief system influences the functioning of a business. For example, if there are varying dynamics experienced in the population demography, it will affect the rate at which they consume goods and services. The change in lifestyle and character of society influences their consumption of products or services, which affects the business either positively or negatively. For example, in a community where the demographic is largely retired and a company deals in products or services aimed at babies, such as nappies, there will be a low volume of sales which will inevitably result in the consolidation of that businesses workforce.