212 economic conditions one of the biggest external

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differences of HRM practices also depend on these legislation and regulations. 2.1.2. Economic Conditions One of the biggest external influences is the shape of the current economy. Not only does it affect the talent pool, but it might affect the ability to hire anyone at all. One of the biggest ways to prepare against economic conditions is to not only know what’s happening in the world around, but also create a plan for when there is an
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economic downturn. Economic conditions are a major external factor that is pretty much outside of the control of HRM but which can have a huge impact on the company. Recessions, economic booms and the general rate of inflation affect consumer demand, which affects personnel needs. Another huge economic factor is the unemployment rate, which affects the market rate for wages and salaries. Today, the changes in the international economy affect all of the national economies in a short time. This is because of the integration of world economies. Accordingly, any recession in a country which is important in world economy, might easily stimulate same conditions in other economies. Therefore, in the unstable terms of world economy, the bargain between unions and firms can be harder. In other words, negative developments for economies would result in undesired situations. That is to say, employment rates and sales would decrease, unemployment would rise up, and so the social status of workers weakens. Organizations should predict the future of economy and plan their functions. Accordingly, economic conditions might have an important affect on labor force, by changing the type and number of personnel demanded. Changes in the national economy directly or indirectly affects human resource activities of firms, in terms of recruitment, employment, redundancy implications, compensation and rewards/salaries. As mentioned above, any recession in national economies might result in the reduction of workforce, or at least significant cuts in wages or salaries and social support spending. 2.1.3. Workforce Demographics: The demographic characteristics of the labor force continue to evolve and change. The dominant effect of these trends is to increase the diversity of the labor force, particularly with respect to age, education, race, sex, and marital status. The key feature of this increased diversity is that much of it is occurring within occupational groups and therefore may have significant implications for occupational analysis systems. Occupations are more likely than in the past to have a mix of workers of various tenures and workers earning different wages. This internal variation provides prima facie evidence that the correspondence between the jobs these workers are performing and the occupational classifications used to label them may be breaking down. Jobs are shaped by the interactive effect of (1) managerial and engineering choices with respect to work design and technology and (2) the knowledge, skills, abilities, and outlooks that individuals bring to the job. The increased variation in demographics that we are witnessing within any one
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