Internal and External Factors Affecting Human Resources

  Reviewed by: Jayne Thompson, LLB, LLM
  Written by: Chris Joseph      Updated November 21, 2018
Business discussion

Human resources departments play an important role in such areas as workforce planning, employee and labor relations, training and development and legal compliance within their organizations. Because it is not directly involved in the production of goods and service, HR may be seen as a separate function apart from the day-to-day operations of a business. Yet, an effective human resources department can make a real difference to the organization's success. An HR department typically encounters a number of internal and external factors as part of its function.

External Factor: Available Labor Pool

Perhaps the main function of human resources departments is to maintain adequate staffing levels through workforce planning. One external factor that influences the ability to recruit qualified candidates is the labor market availability, which is affected by unemployment rates, number of qualified workers in the reasonable commuting distance and, in some cases, the availability of applicants with specialized skills such as nursing or technology. An organization might have difficulty identifying and attracting suitable candidates, especially if the same skill sets are in demand throughout the industry.

The company's geographic location may also be a factor if the labor pool is not large enough in the immediate area. Then, HR managers may need to focus their recruiting efforts outside the region and pay relocation packages as appropriate to encourage qualified staff to take up a position.

External Factor: Government Regulations

Federal and state workplace laws and regulations are external factors affecting human resource management that require human resources to ensure the company is in compliance. Regulations can influence how a company goes about hiring, training, compensating and even disciplining its workers, and a misstep could result in sanctions against the company or even lawsuits filed by employees, prospective employees, vendors and customers. An example is the Americans with Disabilities Act, which in many cases creates the need for companies to modify their office configurations or provide other reasonable accommodations for individuals with disabilities.

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Internal Factor: Level of Growth

An internal factor that impacts human resources is the company's rate of current and projected growth. Companies experiencing aggressive growth and rapid expansion may require its human resources department to focus on recruitment and staffing. More stagnant companies may place a greater focus on efforts on employee retention and improving the company's culture and workplace environment through upgrading job descriptions and enhancing compensation and fringe benefits programs. Downsizing companies may have to take the regrettable decision to lose some of its staff; a message that's often left to HR to relay.

Internal Factor: Use of Technology

One of the key internal factors affecting human resource planning is the willingness for the HR department and company management to use technology to aid in certain key human resources functions. For example, companies that make greater use of tools such as online benefits management, where employees can make changes to their benefit plans on their own, provide human resources workers with more time to focus on other areas like recruiting or training and employee development. This can free up a considerable amount of time and resources across the organization.

About the Author

Chris Joseph writes for websites and online publications, covering business and technology. He holds a Bachelor of Science in marketing from York College of Pennsylvania.

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