Last Updated 18 Jun 2020

Factors Affecting HRM Practices

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Businesses are known to be affected by its environment (see Porter, 1979) and its strategies are shaped by their environment. According to Allen (1998), the business environment is composed of the internal and external environment. The former refers to the environment the business organisation which is characterized by the organization itself: its structure, culture, size and strategies, while the latter refers to the outside forces that affect the organisation’s ability to achieve its objectives (Allen, 1998).

Allen (1998) added that an organisation is a system that takes inputs such as labour, materials, and equipments which can be obtained from its external environment. Therefore, it is the external environment that provides opportunity and threat to an organisation, requiring an organisation to adapt to whatever changes that may occur. Korman and Kraut (1999) suggests that there are five significant environmental forces that influence HRM policy and practices: demographics, economics, legal and regulatory issues, technology, and attitudes and values.

Demographics refers to the quantity and quality of the workforce (Korman and Kraut, 1999, p. 4) in an organisation and available in the external environment. Pfeffer (1983) defined employee demography as “the study of the composition of a social entity in terms of its members’ attributes”. Such attributes include gender, age, ethnicity, marital and family status, occupation, literacy rate, salary levels and seniority. These characteristics are important in developing HRM practices because they reflect the characteristics of the workforce available in the environment of an organisation.

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Demographics affects staffing and performance, two of the major functions of HRM, one of which is administration (Taylor, 1998). Demographics dictates the number of employees that can qualify to be a member of the organisation, the educational attainment of the population, the physical and mental competency of the population, and the level of diversity that may affect the organisation. Demographics is also taken into consideration when making company policy and establishing corporate culture. As stated above, an organisation is a system thus, every factor including demographics affect the overall performance of an organisation.

In a workplace, gender, age, occupation and ethnicity and culture, and seniority are the attributes that are very important in HRM. Gender In the past, women are not allowed to work or to take higher positions in a company. But due to the changes in legislation and to the beliefs of the society, women now take significant roles in business organisations. However, a large number of studies about the differences in behaviour and attitudes of males and females found out that gender differences really exist (Mor Baral et al, 1998; Konrad and Hartmann, 2002) which usually lead to discriminatory practices against women.

Such differences affect the attitudes and behaviour in the workplace that may result to employee dissatisfaction, higher turn-over rate and decline in productivity. Gender differences can also result to misalignment of objectives and the inability to work as a team. HRM’s role then is to promote gender equity and fairness, and other policy that address the negative effect of gender differences such as equality in training and development, selection and staffing. Age It is a common practice of HRM to set age limit when recruiting and selecting employees.

This is because research reflects that variation in employee age is also associated with attitude and behavioural differences. Most companies do not hire applicants below 18 years of age due to immaturity or because most people below 18 are still studying and do not meet the educational qualifications needed by business organisations. On the other hand, it was found out that about 25% of employers considered people aged 50 years old and above too old to recruit (McKay, 1998). Age serves as the basis of maturity, experience and knowledge of individuals vying for a position in a company.

Additionally, Wagner et al (1984) noted that a long term experience may influence attitudes and beliefs which often varied in different age groups. Younger employees tend to believe in new strategies and processes (e. g. internet marketing, automation or robotics) while older employees may believe that traditional processes are still more effective. Older employees may also believe on horizontally structured organisations while younger employees function more effectively when they are empowered by vertically structured organisation.

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