Factors Affecting HR Practices in Organizations
Introduction:
Good human resource (HR) practices play a crucial role in enhancing the performance and
competitiveness of organizations. However, numerous internal and external factors can influence HR
practices and strategies. These factors, originating from the external and internal environment, have
a significant impact on HR strategies and operations. Some of the major potential
influences are as follows:
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Economic Changes
Technological Changes
National Culture
Legislations & Regulations
Action of Unions
Globalization
Organizations Size
Organisational Structure
Business Strategy
Top Management
Academic and Professional influence on HR Practices
These factors can be classified as external and internal based on the environment and the extent of
control HR possesses on these factors.
External Factors.
External factors affecting HR practices are those pressures on firms that cannot be controlled and
changed in a favourable way in the short run (Kane and Palmer,1995).
The external factors include the following:
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Economic Changes
Technological Changes
Socio-Cultural Changes
Legislations & Regulations
Action of Unions
Globalization
Economic Changes:
Economic Cycles: The overall economic climate, such as economic growth, recession, or
inflation, can significantly affect HR practices. Organizations may need to adjust their HR strategies
based on market demand, financial constraints, and talent availability. During periods of economic
growth, organizations may focus on talent acquisition, retention, and employee development. In
contrast, during economic downturns, cost reduction measures, downsizing, and restructuring might
become necessary.
Sources:
Cascio, W. F. (2020). Managing Human Resources: Productivity, Quality of Work Life, Profits.
McGraw-Hill Education.
Gerhart, B., Hollenbeck, J. R., Noe, R. A., & Wright, P. M. (2020). Fundamentals of Human
Resource Management. McGraw-Hill Education.
Global Trades: The ever-growing shift towards the global marketplaces forces organizations
to consider how they manage the employees. Global trade opens new markets and business
opportunities in different countries. HR practices need to align with these expansion plans by
identifying the talent requirements for international operations. This may involve assessing the skills
and competencies needed in different regions, developing recruitment strategies to attract global
talent, and adapting talent acquisition processes to encompass international recruitment channels.
Productivity and knowledge of workers: Productivity increases as the organization finds new
ways to use fewer resources to produce its output. One method to achieve this is to require
employees to acquire new skills and knowledge. HR practices should prioritize learning and
development initiatives that enhance employees' capabilities and foster a culture of innovation. This
may include offering training programs, organizing workshops or seminars, providing access to online
learning platforms, and encouraging employees to pursue professional development opportunities.
Technological Changes
Automation and Digitization: Advancements in technology, such as artificial intelligence,
machine learning, and robotics, have revolutionized HR practices. Automation can streamline HR
processes, enhance efficiency, and improve employee experiences. However, it can also lead to job
displacement and the need for upskilling.
Flexi-work: Connectivity and remote work technologies enable organizations to offer flexible
work arrangements such as telecommuting, flexible hours, or remote work options. HR practices
need to adapt to these changes by establishing policies and guidelines for remote work, managing
virtual teams, and ensuring effective communication and collaboration among geographically
dispersed employees.
Socio-Cultural Changes: Understanding how to set up HRM strategies that can deal with cultural and
national diversity is more important than ever due to the growing internationalization and
globalization of business (Alas et al., 2008). According to Chandrakumara and Sparrow (2004), culture
plays a significant role in how firms like to establish the right structure and procedures for their HR
operations. According to Yeganeh and Su (2008), cultural variables affect a wide range of issues and
vary considerably between nations. It can vary from the leadership style and management approach
to communication and language differences of the teams.
Leadership style: HR practices need to consider cultural preferences and expectations
regarding authority, decision-making, and hierarchy. For example, in some cultures, a more
participatory and collaborative leadership style may be preferred, while in others, a more directive
and hierarchical approach may be valued. HR practices should align leadership development
programs and management practices with the cultural context to effectively lead and manage
employees.
Communication and Language Difference: National culture can impact communication styles
and language preferences. HR practices need to adapt communication strategies to accommodate
cultural norms and language differences. This may involve providing language training, promoting
cross-cultural communication skills, and implementing communication channels that resonate with
the cultural context.
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External Factors Affecting HR Practices in an Organization
Introduction: Human resource (HR) practices in organizations are influenced by a
wide range of external factors. These factors, originating from the external
environment, have a significant impact on HR strategies and operations. This paper
aims to explore key external factors affecting HR practices, discussing their
implications and providing insights for effective HR management.
I. Legal and Regulatory Factors:
1. Employment Laws: Laws and regulations related to employment have a
substantial influence on HR practices. These include laws on labor rights,
minimum wage, working hours, employee benefits, and anti-discrimination
measures. Compliance with these laws is crucial for organizations to ensure
fair and ethical treatment of employees.
Sources:
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Mathis, R. L., Jackson, J. H., & Valentine, S. R. (2017). Human Resource
Management. Cengage Learning.
Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2021). Human
Resource Management: Gaining a Competitive Advantage. McGraw-Hill
Education.
II. Economic Factors:
1. Market Conditions: The state of the economy, including factors such as
economic growth, recession, and market competition, significantly impact HR
practices. Organizations may need to adjust their HR strategies based on
market demand, financial constraints, and talent availability.
Sources:
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Cascio, W. F. (2020). Managing Human Resources: Productivity, Quality of Work
Life, Profits. McGraw-Hill Education.
Gerhart, B., Hollenbeck, J. R., Noe, R. A., & Wright, P. M. (2020). Fundamentals
of Human Resource Management. McGraw-Hill Education.
III. Technological Factors:
1. Technological Advancements: Rapid technological developments have
transformative effects on HR practices. Automation, artificial intelligence, and
digital platforms are revolutionizing talent acquisition, employee engagement,
training, and performance management. HR professionals must adapt to these
advancements to remain effective in their roles.
Sources:
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Budhwar, P. S., & Debrah, Y. A. (Eds.). (2019). Human Resource Management in
Developing Countries. Routledge.
Parry, E., & Tyson, S. (2019). Human Resource Management: A Contemporary
Approach. Red Globe Press.
IV. Socio-Cultural Factors:
1. Demographic Changes: Social and demographic shifts, such as aging
populations, generational differences, and diversity, influence HR practices.
Organizations need to address the needs and expectations of a diverse
workforce, foster inclusion, and create a positive work environment.
Sources:
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Jackson, S. E., Schuler, R. S., & Werner, S. (2020). Managing Human Resources.
Cengage Learning.
Kramar, R., Syed, J., & Riggio, R. E. (Eds.). (2018). The Oxford Handbook of
Workplace Diversity. Oxford University Press.
V. Political and Global Factors:
1. Government Policies and International Relations: Political factors, including
government policies, trade agreements, and geopolitical events, can impact
HR practices. Changes in immigration policies, global labor markets, and
cross-border collaborations affect talent acquisition, mobility, and
organizational strategies.
Sources:
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Briscoe, D. R., Schuler, R. S., & Tarique, I. (2012). International Human Resource
Management: Policies and Practices for Multinational Enterprises. Rout
Internal Factors
Organizational Culture:
Source: Schein, E. H. (2010). Organizational culture and leadership (4th ed.). Jossey-Bass.
Leadership and Management:
Source: Bass, B. M., & Riggio, R. E. (2006). Transformational leadership (2nd ed.). Psychology Press.
Organizational Structure:
Source: Mintzberg, H. (1980). Structure in 5's: A synthesis of the research on organization design.
Management Science, 26(3), 322-341.
Internal Communication:
Source: Argenti, P. A., & Barnes, C. M. (2009). Digital strategies for powerful corporate
communications. McGraw-Hill.
Employee Engagement and Motivation:
Source: Maslach, C., Schaufeli, W. B., & Leiter, M. P. (2001). Job burnout. Annual Review of
Psychology, 52(1), 397-422.
Talent Management and Development:
Source: Tansley, C., & Tietze, S. (2013). Human resource management in high-performance
organizations: Current perspectives and future challenges. Journal of Organizational Effectiveness:
People and Performance, 1(2), 173-190.