EXTERNAL FACTORSFactors from outside the system External factors include:Political factorsEconomic factorsSocial/cultural factorsTechnological factors

POLITICAL-LEGAL FACTORSCovers 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/CULTURALType of people who become members of an organizationAttitude of workers towards their work- result of their

cultural backgroundTime dimension-people’s orientation-past, present or futureWork ethics, achievement needs and award-reward

expectationsConfinement to certain occupations and regions.

TECHNOLOGICALUpgradation of jobNecessary training Increased productivity, reduced prices and increased real

wages Impact on human relationsHRIS(Human Resource Information System)

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