B. The Dynamic Human Resource Management Environment

Many interrelated factors affect human resource management. Such factors are part of either the firm’s external environment or its internal environment. The firm often has little, if any, control over how the external environment affects management of its human resources. In  addition, there are certain interrelationships that complicate the management of human resources. 

 
I.  External Environmental Factors
External Environmental factors Comprised of those factors that affect a firm’s human resources from outside
the organization’s boundaries.

a.  The Labor Force
The labor force is a pool of individuals external to the firm from which the organization obtains its workers. The capability of a firm’s employees determines to a large extent how well an organization can perform its mission.

b.  Legal Considerations
Another significant external force affecting human resource management relates to federal, state, and local
legislation and the many court decisions interpreting this legislation. In addition, many presidential executive
orders have had a major impact on human resource management.

c.  Society
Society may also exert pressure on human resource management. If a firm is to remain acceptable to the general
public, it must be capable of accomplishing its purpose in line with societal norms. Social responsibility is an
implied, enforced, or felt obligation of managers, acting in their official capacities, to serve or protect the
interests of groups other than themselves. 

d.  Unions
Union is a group of employees who have joined together for the purpose of dealing collectively with their
employer. Although unions remain a powerful force, union membership as a percentage of the nonagricultural workforce slipped from 33 percent in 1955 to 9.5 percent today.

e.  Shareholders
The owners of a corporation are concerned about shareholders. Because shareholders have invested money in a firm, they may at times challenge programs considered by management to be beneficial to the organization.


f.  Competition
For a firm to succeed, grow, and prosper, it must be able to maintain a supply of competent employees. Other
organizations are also striving toward that objective.


g.  Customers
Because sales are critical to the firm’s survival, management has the task of ensuring that its employment
practices do not antagonize the members of the market it serves.

h.  Technology
As technological changes occur, certain skills are no longer required. This necessitates some retraining of the
current workforce. The trend toward a service economy also affects the type and amount of technology needed. 

i.  The Economy
The economy of the nation—on the whole—and of its various segments is a major environmental factor
affecting human resource management. As a generalization, when the economy is booming, it is often more
difficult to recruit qualified workers. On the other hand, when a downturn is experienced, more applicants are typically available.