In this essay, the environmental factors that affect this process will be discussed in order to aid a HR professional to advise senior managers on economic, social, demographic and technological factors that may influence decisions. These factors are known to affect HRP due to the fact that they also affect the participation of labour force in society (Malik, Faridi, Hussain & Shaukat, 2010).
The first environmental factors to be analysed are of economic nature, such as high income tax rates that may make some countries unattractive to some executives.
Secondly, the casualization of the workforce can assist organisations in hiring more or less employees as demand arises, thus reducing costs created by full time employment. Thirdly, the impact of globalization on HRP is described, and it is defended that managers need to gain broad understanding in regards of relocation of staff and using rapid technology advancements in their favour. Then, the role of women in HR, as well as demographic factors such as age and education are taken into account, followed by the analysis of the effect of brain drains on organisations.
Moreover, it is essential for HR professionals to comprehend the cultural aspects of the environment in which they are operating, so as to being able to recognise the reasons behind employees’ attitudes towards certain tasks. Finally, the technological aspect of the HR environment is analysed and modes in which technology can be used to enhance performance and productivity are suggested, and the manner in which outsourcing is related to technology and organisational improvement is explained.
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One of the economic factors suggested by Stone (2010) that may influence on HRP decisions are the high income tax rates applied by the government of countries such as Austria and Belgium (Malik et al. , 2010).
This means that it becomes costly and difficult for organisations in such countries to attract international employees. However, governments are able to assist companies in this issue by implementing tax incentives for high earning international employees. For instance, this is practiced in Nordic nations in order to reduce tax burdens (Gencler, 2012).
This is a relevant matter for HR professionals in Australia, since the country also has heavy taxes that may impede plans of hiring foreign workers (Stone, 2010).
The casualization of the working force is evidently an essential subject to HR managers, since it can assist organisations in having the correct quantity of employees during times of high levels of activity. Malik et al. (2010) suggest that among the demographic factors that influence the availability of casual workers are age, marital status and number of children, with the figure of workers in the casual working force decreasing according to age and education.
Moreover, Watson (2004) believes that this practice results in disadvantages due to poor training and working conditions, as well as low entitlements, all which can be overcome by companies if the proper treatment is provided to this type of personnel. Another matter that has influenced HRP in the last decades is globalisation, since it represents the facilitation in the flow of knowledge and human assets along with Information Technology, which has had a deep impact on competition in the business world (Malik & Aminu, 2010).
What companies around the globe have experienced is that these rapid changes in the international level are not accordingly accompanied by modifications in HR strategic management, thus leading to failure. The obvious solution is to invest in HR and understand the challenges employees face whilst living and working overseas, as well as providing appraisals and training for them (Malik & Aminu, 2010).
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If HR managers fail to do so due to distance, the operations in other countries are likely to be unsuccessful and unviable.
In terms of the demographic factors affecting HRP, they comprise the spheres of the ageing population, the role of women in the workforce and the education of the labour population, which are all issues that HR professionals should be well familiarized with. One example of the influence of age in the workforce is described by Wei (2007), who discovered that the human capital stock has depreciated in Australia in the last years, although investment in education and training has diminished its negative impact in the country.
The decline in population is a matter that must be overcome by organisations worldwide, due to the fact that, according to current trends in HR strategies, more people will be retiring than joining the workforce (Holland, Sheehan & Cieri, 2007).
Therefore, this may lead to the accumulation of tasks performed by one staff member or to the increased use of technology assisting workers. Moreover, the intensification of the “war for talent” may occur, since organisations would have to compete for the most qualified and gifted due to a shortage of skills that may develop under the current circumstances.
Currently, one of the main issues multinational corporations face in emerging markets such as China and India is to recruit qualified employees in such countries, as well as convincing staff members from other areas to relocate to these areas, which are not very attractive (Scullion, Collings & Gunnigle, 2007).
Additionally, this “war for talent” is somewhat related to brain drains, which represents the emigration of a great number of individuals who possess superior skills and knowledge to other countries in search of better opportunities.
In fact, this represents a social factor that influences HRP, where people leave their home countries due to problems such as inequalities and poverty (Aroge & Hassan, 2011).
Consequently, organisations often employ foreigners or wish to relocate staff members, but it is imperative to remember that this results in costs and compliance with the different immigration policies implemented by governments. This means that it might not be possible to follow the geocentric or ethnocentric approaches of recruitment that is often desired by companies.
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However, countries such as the United States and Germany have specific visas that aim to attract highly skilled labourers, whereas in Ireland employees do not need a visa in particular situations (Gencler, 2012).
Another social aspect of HRP refers to the cultural perception that certain tasks do not deliver the level of status sought by many, professions that should only be performed by a group of people with particular characteristics and prejudice.
For instance, it is stated by Faugoo (2011) that despite being considered a very feminized function, until recently females that worked in HR did not earn as much as males, besides not enjoying the same authority within companies. The author also affirms that due to this sexist idea, many male managers had difficulties in admitting that HR is vital to strategic planning, and when they did so, women would not be invited to participate in important decision-making meetings. Therefore, HR managers should be careful in order to ensure that no employees are discriminated due to stereotypes, implementing EEO (equal employment opportunities).
Moreover, HR managers should also be aware that a new trend in relation to women in the workforce is the fact that many of them wish to become mothers, but still focus on their careers (Stone, 2010).
Also, fathers are each time more involved in the education of their children and in household chores. Due to that, companies should invest in flexible working hours and use technology to assist these parents, allowing them to perform certain tasks at home, at the same time they have time to care for their families. A third aspect of social factors that influence HRP is job status and prestige.
Individuals in particular societies that are more academically qualified might find that certain assignments or positions do not reflect the image they wish to transmit to their peers. Consequently, employees may refuse to execute tasks or desire to work in companies that have achieved a high level of success. Ciftcioglu (2010) defends that this results in a positive effect for organisations, due to the fact that if a staff member is proud of the company they work for, they might perform better due to a sense of personal achievement and increased job satisfaction.
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A further factor that is essential to consider in HRP is technology. It is suggested by Stone (2010) that “the internet has made geographic location irrelevant”, thus making meetings and exchange of information between managers from different countries faster and easier, as well as offshoring. Due to significant improvements in technology, offshoring has become a great option for organisations, since it promotes better productivity and decreased costs.
Furthermore, it is known that the access to cheap labour in some countries has been used as a source of competitive advantage by many firms (Mahmud, Billah & Chowdhury, 2012).
Moreover, technology has also impacted on innovation. In order to foster originality and creativity, organisations must develop structures that are flexible and provide training, so as to allow innovation to take place (Lin, 2011).
Finally, outsourcing, either in other countries due to cheaper labour or peaks in demand, is an environmental factor that brings many implications for HR professionals.
One of the aspects that HR specialists must focus on is the performance of employees working in this condition. In order to assist in the understanding of workers’ experience, five factors should be taken into account. They are: physical location, temporal nature, exclusivity, willingness to execute outsourced work and strategic value (Fisher, Wasserman, Wolf & Wears, 2008).
Physical location may have different impacts on individuals depending on whether they are working directly in contact with clients or not. If they are, it is likely that motivation will be increased.
Secondly, the time workers are contracted to complete tasks affects their ability to further develop skills and their disposition to invest more in the company. Whereas exclusivity means that employees develop a closer relationship with customers, voluntariness deals with the fact that perhaps individuals would rather be official employees than outsourced workers, which affects job satisfaction. Finally, strategic value can influence the outsourcing work experience positively if it is believed that the task performed will assist in adding value.
On the contrary, it depends on HR professionals to solve this issue using job analysis and design so as to enrich assignments and distribute more responsibilities that result in more fulfilled workers (Fisher, Wasserman, Wolf & Wears, 2008).
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It is possible to conclude that managers should closely analyse all the environmental factors that may influence HRP in order to avoid encountering obstacles that could have been foreseen. Also, anticipating employees’ needs or how certain tasks may affect their performance contributes to more prepared HR professionals, who can assist staff in overcoming issues and enhancing their performance.