1.5 Human Resources and Environmental Factors

External and internal influences affect how human resources develops its policies and practices.  HR Managers have the responsibility to research and monitor these influences and how they impact the organization. This monitoring is a continual process as the world of work is ever changing. When there are issues, the HR Manager must respond and be proactive to ensure the organization is protected and moving forward with positive change.

External Factors

Labour Market 

The world is a diverse place today. This includes demographics (gender, age, race, etc.) and values and norms of different societies. There are also differences in people such as gender identification and nationality. There are protected groups in Canada (visible minorities, women, Aboriginal peoples, persons with disabilities). HR departments need to recognize and respect the diverse groups within the workplace.

Economy

The economic conditions of the world affect supply and demand for products and services. This impacts employment supply and demand. When the economy is good, employers hire more people; when the economy is poor, employers lay off employees. If unemployment is low, competition for talented people becomes higher. Companies need to develop better strategies to hire and retain their workers by offering higher wages and benefits, and more perks for employees. When an employer needs to downsize they lay off workers, offer early retirement to mature workers, or early leave programs. HR departments are charged with the responsibility of hiring and laying off employees through longer term projections of the demand for employees.

Production

Productivity is the outputs of goods and services in relation to inputs which is related to people, capital, materials, energy. Companies need to be aware of productivity and how it is impacted through competition on the world markets. HR departments need to find ways to produce more products/services with fewer resources; yet provide employee job satisfaction.  This is important for the long term survival of companies.

Generations of Workers

As an example of generational workers, never before in history, has there been four generations of workers in the workplace at the same time. They include traditionalists (1922-1945), baby boomers (1946-1964), generation X (1965-1980), and generation Y (1981-late 90’s). HR needs to balance the needs and wants of four generations who are all different in the values, attitudes, and characteristics. As these generations collide, HR departments need to understand these groups different needs, and give each generation attention to ensure job satisfaction. As well, they need to ensure the different generations can communicate and collaborate together (Tanner, 2020).

Education

There are higher expectations for education in the workplace today. This can include post secondary education (colleges, universities).  People are expected to have higher literacy skills (understand, write, read). HR departments are responsible at ensuring the talents of employees are put to good use and opportunities are provided for career advancement.  At the same time, they may be responsible to provide literacy programs for employees.

Internal Factors

Organization Culture

Understood as the organization’s shared values, beliefs and attitudes and how they impact the employee’s behaviour.  The culture of organizations is viewed by employees within the mission and vision statements ( part of the strategic plan).  It speaks to symbols, stories, and ceremonial events. As well, it helps employees gain a sense of purpose, describes the norms of the company (which are the beliefs, values and attitudes). The culture shapes the attitudes of the employees and defines employee’s roles within the company. The result is loyal and committed employees.  A bank with its bureaucratic structure and hierarchy has a different culture than Facebook which has less structure and a flattened hierarchy. HR departments are important to the organizational culture in creating and maintaining the proper culture.  They may have employee of the month wall pictures to celebrate an employee’s achievements. Companies plan parties, baseball games, family outings for employees. A logo for a company is distinct and viewed as a symbol for employees.  All these culture efforts support recruiting employees and help to retain employees through loyalty.

Management Practice

Traditional hierarchical structures are built as pyramids. The CEO leads the organization, and everyone else is a subordinate. There are many levels of management with employees at the bottom of the pyramid. It serves for employees to work smart and find opportunity for advancement. Often employees become specialists in the field and narrow their focus on their own department. Communication across departments can be challenging.  Sometimes, companies are slow to change as they are bogged down in bureaucracy. Management practices have shifted over the years from traditional hierarchical structures to flat structures that strive for better communication and relationship building between management and employees. The result is a simpler and more efficient chain of command. In turn, employees have more responsibility to make decisions. By eliminating middle managers budget costs are less. HR departments play an important role in creating and implementing management practices through performance management and through designing employee compensation, training and development for advancement, goal setting with employees, and helping the organization simplify its technology and analytics.

Organizational Climate 

Refers to the atmosphere of the organization and the employee’s perception of the organization (Jay, n.d.).  It is much like a personality with each person being unique. Each company wants to be unique too. The climate of the company influences the behaviour of the employees in how they build relationships, their autonomy and the organizational structure.  Some employee perception examples include whether employees are trusted to complete their jobs without micromanaging, whether they feel they are developing in the company, and are they rewarded for high performance.  Employees who are happy employees are productive employees.  HR can support the organizational climate by using surveys to measure the “temperature” of the organization and make suggestions to improve the climate for employee satisfaction and skill development that leads to higher productivity. This results in employee retention and more profits.

Technology 

Technology has revolutionized how organizations function. They have the ability to automate all processes/products/services, overhead costs are reduced, employees are more productive, customers are served better, and remote work opens a wider pool of talent for companies. Digital innovation allows organizations to easily control work with more uniformity, opens up faster communication through email, instant messages and video conferencing. Through quicker communication, collaboration is increased that leads to more creativity.  Employees and teams can respond to problems and change in minutes with solutions. Technology eliminates waste resulting in cost savings and increased revenue. It has and will continue to shape the workplace and innovation. HR departments use technology to hire employees, support administration, training and development, provide analytics, and much more. There are many technological tools that help HR Managers make decisions related to attendance, legal issues, track employee progress that assist in the strategic alignment of the business.  Communication is enhanced between the company and employees with relevant and up-to-date data and reports.

Globalization

The world market is now responsible for most of the products and services provided today. This has lead to businesses becoming highly competitive. Many organizations have expanded around the world. The world is more connected and interdependent than any time in history.  Another output in globalization is the movement of people throughout the world to work in different countries. It makes it easier with technology that leads to more innovation. There are lower costs to products, higher standards of living in some countries, offers access to new markets, and access to higher standards of talent. HR departments now recognize that employees may come from around the world, speak different languages and cultures. The skills and experiences of global HR departments has changed.  New and different policies are created, learn about cross-cultural differences, meet social responsibility requirements (lower wages in some countries, fair working conditions), and managing a diverse workforce. They rely on technology to communicate with employees in different countries, and deal with time zone differences.

Government

There are many laws designed by the government that impact HRM. In Canada the primary laws include minimum wage standards, overtime pay, sick benefits, human rights, vacation pay, protected groups, diversity and equity, sexual harassment, health and safety and labour relations.  The legal framework in Canada includes the Canadian Charter of Rights and Freedoms, The Canadian Human Rights Act/Quebec Human Rights Act, Pay Equity, Employment Equity to name a few.  HR departments need to ensure employment and work practices demonstrate a good understanding of all the applicable laws and regulations.  The laws are at the federal, provincial and territorial levels; and, in Canada, they may be different in different provinces and territories.

“1.5 Human Resources and Environmental Factors” from Human Resources Management – 3rd Edition by Debra Patterson is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.