EXTERNAL FACTORS

Factors from outside the system

External factors include:
Political factors
Economic factors
Social/cultural factors
Technological factors
POLITICAL-LEGAL FACTORS
 Covers the impact of political institutions on HRM department.
 3 institutions which together constitute the total political environment:
 The legislature- the law making body
The plethora of labour acts which are in force are enacted by the
legislature.
 The executive- the law implementing body
The legislature decides and the executive acts.
 The judiciary-the watchdog
The main role is to ensure that both the above work within the
confines of constitution and in public interest.
 The interface between political environment and labour- labour laws.
 Ex. Some relate to Terms and conditions of employment, some to working
conditions, a few others over payment of wages ,and others contain provisions
relating to industrial disputes.
 Constitution- genesis of all acts.
 Article 14- equality before the law
 Article 15 – prohibits discrimination on the grounds of religion,race,caste,sex or
place of birth.
 Article 16- equality of opportunity in matter of public employment.
 Article 23 – prohibits forced labour
 Article 24- prohibits employment of children in factories, mines or hazardous
jobs.
 Article 38(d)- equal pay for equal work both for men and women.
 Article 42- just and humane conditions of work, and maternity leave for
women.
 Article 43(a)- participation of workers in the management.
 All HR activities are affected in one way or the other by them.
 HR planning, recruitment and selection,placement,training and
development,remuneration,employee relations and separation are conditioned
by Constitutional provisions.
ECONOMIC
 All those economic factors which have a bearing on the HR function- economic
growth, industrial production,agriculture,population,national and per capita income,
money and capital markets,suppliers,competitors,customers and industrial labour.
 Suppliers-employment exchanges,universities,colleges,consulting firms etc.
 Competitors-as the number of organisations opting for human resources
increases,so does the importance of the staffing function and its appraisal and
compensation activities.
 Customers-as customers want high quality products at reasonable prices ,so
everybody in the organisation must endeavour to offer products which give
satisfaction for the money customers pay.
 Economic growth- whether a country is economically developed or not affects the
quality of labour which depends on education and health available for its citizens.
Realizing the relationship between among health,eductaion,quality labour and
productivity ,development policies tend to focus on these variables simultaneously.
 Industrial labour- changes that have taken place in industrail labour,over the
years,particularly in the organised sector
 Commitment to industry
 Protective legislation
 Status
 Employment pattern
 Unionisation
 Diversity- organizations are increasingly becoming cosmopolitan.
A typical organization is emerging as an amalgam of diverse workforce in
terms of gender, race and culture.
Diversity, if properly amnaged,can increase creativity and innovation in
organizations as well as improve decision making by providing different
perspectives on problems.
 Globalization-considerable influence on HR functions. Employee
hiring,training,motivation,compensation and retaining are to be guided by
global perspective.
As every advanced nation is increasingly becoming globalised, skills and
cumulative learning of its workforce become its competitive assets.
The benefits between globalization and workers are mutual-it forms a
virtuous circle- well trained workers attract MNCs,which invest and offer
workers good jobs which in turn generate additional training and experience.
SOCIAL/CULTURAL
 Type of people who become members of an organization
 Attitude of workers towards their work- result of their cultural
background
 Time dimension-people’s orientation-past, present or future
 Work ethics, achievement needs and award-reward expectations
 Confinement to certain occupations and regions.
TECHNOLOGICAL
 Upgradation of job
 Necessary training
 Increased productivity, reduced prices and increased real wages
 Impact on human relations
 HRIS(Human Resource Information System)
THANK YOU