Knowing how internal and external environmental factors affect your company can help your business thrive.
Internal and External Factors Affecting Human Resources by Chris Joseph - Updated November 21, Human resources departments play an important role in such areas as workforce planning, employee and labor relations, training and development and legal compliance within their organizations.
Because it is not directly involved in the production of goods and service, HR may be seen as a separate function apart from the day-to-day operations of a business.
Yet, an effective human resources department can make a real difference to the organization's success. An HR department typically encounters a number of internal and external factors as part of its function.
Available Labor Pool Perhaps the main function of human resources departments is to maintain adequate staffing levels through workforce planning. One external factor that influences the ability to recruit qualified candidates is the labor market availability, which is affected by unemployment rates, number of qualified workers in the reasonable commuting distance and, in some cases, the availability of applicants with specialized skills such as nursing or technology.
An organization might have difficulty identifying and attracting suitable candidates, especially if the same skill sets are in demand throughout the industry.
Factors Affecting Employee Compensation The Compensation is the monetary and non-monetary rewards given to the employees in return for their work done for the organization. Basically, the compensation is in the form of salaries and wages. There are several internal and external factors affecting employee compensation, which are discussed in detail below. Knowing how internal and external environmental factors affect your company can help your business thrive. External: The Economy In a bad economy, even a well-run business may not be able to survive. The strength of employees is also an essential internal business factor. Check if employees are motivated, hard-working and talented. Check if employees are motivated, hard-working and talented.
The company's geographic location may also be a factor if the labor pool is not large enough in the immediate area.
Then, HR managers may need to focus their recruiting efforts outside the region and pay relocation packages as appropriate to encourage qualified staff to take up a position. Government Regulations Federal and state workplace laws and regulations are external factors affecting human resource management that require human resources to ensure the company is in compliance.
Regulations can influence how a company goes about hiring, training, compensating and even disciplining its workers, and a misstep could result in sanctions against the company or even lawsuits filed by employees, prospective employees, vendors and customers.
An example is the Americans with Disabilities Act, which in many cases creates the need for companies to modify their office configurations or provide other reasonable accommodations for individuals with disabilities. Level of Growth An internal factor that impacts human resources is the company's rate of current and projected growth.
Companies experiencing aggressive growth and rapid expansion may require its human resources department to focus on recruitment and staffing.
More stagnant companies may place a greater focus on efforts on employee retention and improving the company's culture and workplace environment through upgrading job descriptions and enhancing compensation and fringe benefits programs.
Downsizing companies may have to take the regrettable decision to lose some of its staff; a message that's often left to HR to relay.
Use of Technology One of the key internal factors affecting human resource planning is the willingness for the HR department and company management to use technology to aid in certain key human resources functions. For example, companies that make greater use of tools such as online benefits management, where employees can make changes to their benefit plans on their own, provide human resources workers with more time to focus on other areas like recruiting or training and employee development.
This can free up a considerable amount of time and resources across the organization.Knowing how internal and external environmental factors affect your company can help your business thrive.
External: The Economy In a bad economy, even a well-run business may not be able to survive. Internal factors in an organization are factors that are within its control, such as the organization's culture, its management structure and internal communication.
A positive organizational culture is vital for a growing organization because it impacts employee morale and the timely completion of projects. In a high performing workplace, the workers not only have talent, but they also work better together. The employees and departments collaborate on ideas and resolutions.
The internal factors basically include the inner strengths and weaknesses. Internal factors can affect how a company meets its objectives.
Jun 29, · The same internal factors that lead to an organization's success inevitably characterize that organization's relationship to the external environment in these broad areas. In order for an organization to be effective and successful in the ever-changing business world, these four functions of management are necessary.
However, the performance of these functions in any organization is usually affected by both internal and external factors. While examples of internal. External Factors. External factors that affect an organization may be political, economic, social or technological.
The same internal factors that lead to an organization's success inevitably characterize that organization's relationship to the external environment in these broad areas.