Factors influencing Management Decision

Decisions making in organization by management its likely to be very complicated, as the

both side (employer and employee) of the organization need to be take into consideration.
Adapting the field is essential because the internal policies and legislation may change time
to time. Factors that affect the management decision were divided into two, as internal and
external elements.
External
Changes in the National Economy
The Changes in the national economy openly affects the business of a firm
and these indirectly hits the decision making of management especially
on recruitment, employment, redundancy implications, compensation and
rewards/salaries. During the recession period in national economy, the
retrenchment and revise for the minimum wages and salaries took place
in the firm. Rosman and colleagues (2013) stressed the significant
interference of national economy on HR policies. The growth in the
economy brings labour demand and also wages. A stabilized internal
economy reinforces the organizations outcome where it benefits the
employer and employee. Therefore the economic situation plays a vital
role influencing the decision of management.
Industry Characteristics
The industry might also influencing the management decision in diverse
ways, the service industry like banking, education or health are expected
to be more delicate on the decision making on human resources related
issues. Because this industry deeply reliable on the expertise they hired
based on their skills and abilities. Industry like mining and construction
needs to consider the security level in the work area this to avoid
unnecessary compensations and penalties. These sort of things need to
be considered in decision making as its involved with employees life,
health and organizations dignity.
Legislation/Regulation

The entire management decisions are expected to be in accordance with

legal obligation. All the firms need to follow the government regulations
and implement the law in practice. Based on Tiwari and Saxena (2012)
argues that Human Resources Management policies shall depend on the
legislation and regulation of the counties. Also, Mello (2006) argues that,
legislation and regulation have impacts on every function and activity of
an
Organization and its human resource management decisions. Every firm
should consider the related law before making any decision.
Actions of Unions
Actions of unions also plays a role in decision making in the context of
human resources related in organization. The management should
consider the demands of unions while planning the future of the
organizations. Simultaneously the labour contracts, breaking contracts,
compensations, determining the salaries and wages decisions need to
agree by the unions. Therefore, the decision of the firm in terms of human
resource management is to be considered under the influences of unions.
In relation to this, it was found by
Jackson and colloquies (1989) that, organizations with a union use more
formal performance appraisals, and this appraisal mainly to identify
training needs.

Internal
Organizational Mission/Purpose
The decisions of the organizations shall meet their mission statement,
because it determines the outline of the firm should function in.
Consequently the human resource policies also likely to be determine by
the mission statement. As Bart and Baetz, (1998), and Bartkus and
colleagues (2004; 2006) stated that, by presenting values and philosophy,
mission statements facilitate both managements and employees non

routine decision making. Furthermore a superlative mission statement

tends to be the foundation of organization policies to inspire the
employees with contented including words about quality and social
benefits.
History/Traditions/Past Practice
The

past

history

and

practices

also

influencing

the

decision

of

management. The history discloses the right to the organization. It helps

to look back on employees before deciding the rewarding them.
Accordingly, traditions which show the efficient methods for HRM
functions would be the base for related strategy, so the policies. The
history, traditions, and past practices of organizations could be the
foundation of resistance before taking decisions.
Rosman et al. (2013) pointed that, a firm culture is one of the main
internal factors affecting the role of human resource department.
Priorities of Top Management
The priorities of top management is one of the decision making influence.
The internal promotion or increment, required characteristics for the
recruitment and policies of
wage and salary, relations with unions, breaking job contracts could all be
shaped through the importance, which top management personal interest
take place. These priorities also can be considered as politics, professional
actions. The management concentrate to the internal harmony while
making decisions Mabey and Salaman (1995) stated that the importance
of shareholder priorities and management agendas on training and
development activities. The interference of top management its one of
the influences in decisions making.
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