External factors impact the size and availability of the pool of potential employees for the business.
These can include:
Technological change: e.g. better technology can lead to more working from home.
Demographic change: e.g. an aging population, reduced birth rate or migration etc.
These factors affect the size of the labour pool and the skills they have to offer.
The state of the economy: e.g. in a recession, the unemployment rate is higher which allows business to ‘pick and choose’ people with right skills and experience (also they are willing to accept lower wages).
Demographic change
- Changes in demographic populations.
- Ageing populations: Increased dependent population, reduced labour mobility, changes in consumption patterns, change in employment patterns.
- Friends and family affect geographic mobility.
- Relocation costs.
- Cost of living.
- Language and cultural differences.
- Electronic/online recruitment.
- Online meetings.
- Flexitime and teleworking.
- Online training courses.
Internal factors changes from within the business itself.
These can include:
Changes in business organisation: businesses change the way they are organised in order to better meet their strategic objectives.
Changes in labour relations: labour unionisation causes businesses to give in to some of their requirements in order to keep the business running and the workforce motivated.
Changes in business finance: financial difficulties cause businesses lay off some workers to minimise the costs.
