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Environmental Influences on Human Resources Management

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Environmental Influences on Human Resources Management

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External & Internal Environmental Factors Influencing HR Activities

A successful human resources strategy complements a company's mission and goals -- so what works for an industry giant won't necessarily be suitable for your small business. The factors influencing HR activities aren't static: To maximize recruitment and retention, and to minimize employee issues, small business managers must continually monitor internal and external environmental factors and adjust HR strategy accordingly. To do that, it's important to know what the internal and external factors can consist of.

Competition
The extent of competition in your industry affects your company's ability to recruit qualified workers. Industry giants find that candidates seek them out. There is no need to spend money advertising each recruitment in such a case, because candidates will visit the company website of their own accord. Small businesses typically don't have the same branding power or company reputation, though, and need to actively seek qualified candidates for critical positions. In such a scenario, a human resources department will need to focus on developing recruitment materials and attending job fairs to promote the company and attract applicants. Similarly, HR should develop programs and incentives to retain key employees. Compensation

Labor supply drives the amount of compensation a business must offer to attract employees. In an oversaturated market, when unemployment is high and many more qualified candidates exist than job opportunities, the amount of compensation you must provide is less than when a shortage of candidates exists and you are competing against multiple other companies to recruit employees. HR must continually evaluate the compensation structure by conducting industry- and location-specific salary surveys to ensure wages remain competitive enough to attract and retain key staff members but low enough that the business remains financially competitive. HR must...

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