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Factors Influencing Hrm

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The following essay is an effort to understand the notion that human resource functions cannot be performed in isolation. There is an intense need to identify the external and internal factors that influence the HRM functions and practices. The essay also identifies how successful companies like Nokia, Sony, Panasonic, Ikea, Commonwealth bank, have managed the impact of various internal and external factors to become leaders in their industry. Human resource management has achieved significant importance in recent years both in terms of theory and practice and corporations today cannot ignore the importance of managing human capital in order to achieve their goals and objectives.

Factors Influencing Human Resource Management Functions

In simple sense, Human Resource Management (now onwards referred as HRM) means managing people effectively in order to achieve the goals and objectives of any organizations, small or big. More sophistically, HRM involves all management decisions and practices that directly affect or influence the people, or human resources, who work for the organization. Corporations today have increased their attention towards managing human capital effectively. The reason behind this notion is that employees enable an organization to achieve its goals and that managing human capital is critical to an organization's success.

Managing human resources is the vital role of managers in all organizations, both private and public. The changing world order has forced organizations to take a hard look at the ways they manage their people to make them more effective and efficient. Research has shown time and again that Human Resource Management practices can make an important, practical difference in terms of three key organizational outcomes: productivity, quality of work life, and profit. The issues of managing human resources are the key roles that managers in every organization in the business world have to pay attention in order to make their companies more productive, effective and efficient and also gain competitive advantages over their competitors.

HRM is one of the key fundamentals in coordinating and managing organizations. It is no more than a renaming of personnel functions which does little that is different from traditional practice of personnel management.

HRM involves the functions of planning and forecasting the personnel needs of the business, as well as putting in place systems for appraising, rewarding and developing staff. Hiring and training good staff are major tasks during the Start-Up Stage that ensures selection of high performance staff that can deal with performance issues and making sure that the firms' personnel and management practices conform to various regulations. Business today is becoming more and more about working successfully in a team. Human resource management is integral to developing staff that have the skills to work independently but also as part of a team.

An important note to be considered here is that any organization does not exist in vacuum. For this reason, HRM functions and activities cannot be undertaken in vacuum. The external and internal environment within which the firms operate needs to be identified and accordingly HRM functions are to be carried out (Susan J, Randall S, 1995). There are various internal and external factors that influence a firm's hiring and training activities. There is an intense need to analyze these factors to effectively carry out the HRM functions. External factors are those factors over which organizations have no or little control, but the better they understand those factors, the better they can adapt to it and develop appropriate HRM strategies. The external environment refers to conditions that are outside of the organization which includes legal, social and political conditions, customers' preferences, competitors, unionization; labor market conditions; industry characteristics; and national cultures (Susan et al, 1995).The internal environment consists of those elements over which an organization has control or which it can use in order to gain information that will better help it in its HRM functions (Da-group, 2004). Now let's understand how few of those external and internal factors affect the HRM functions.

Legal and political environments affect almost all aspects of the HRM functions. Different organizations have to follow different set of rules in context of their HRM functions. According to McKinnon & Murphy (2006), certain legislations are to be considered before conducting a recruitment and selection process such as; privacy that includes ethical and other legislative issues. For example, Nokia believes that complying with relevant national laws and collective agreements as well as internationally recognized standards and practices, such as those of United Nation's Universal Declaration of Human Rights, the International Labor Organization and Global Compact, is fundamental to their employment practices and the way they carry out their business globally (Nokia, 2007).

According to Brewster and Hegewisch (1994), as US corporations expand their operations abroad, they face additional legal concerns in terms of HRM policies and practices. For example, in European countries, organizations are obliged to set aside specific sums of money for formal training and development. And for corporations that employ expatriates abroad, immigration and taxation treaties can influence staffing decisions (Dowling PJ, Schuler RS, Welch DE. 1994). In an example of Hewlett-Packard, Julian & Katie (1996) indicates that Australian human resource practices have led the organizations to move their selection criteria away from relying highly on the technical abilities. Major stress is laid on analytical, communication and management skill or behavioral attributes. This has influenced the HRM practices of other organizations within Australia.

Firms not only have to consider the legal and political environment, they also have to into consideration the labor market conditions while conducting HRM functions. Labor market conditions can be characterized along several dimensions including unemployment levels, labor diversity, and labor market structure. Unemployment levels and labor market structures have long been recognized as important macroeconomic variables, whereas the importance of labor diversity has been recognized more



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