Question

How understanding the economy, and understanding economic principals can help human resource professionals ?

Answer 1

ANSWER: Human Resource professional’s deals with issues related to performance management, compensation, organisation development, wellness, safety, benefits, employee motivation, training and others. The economics is related to human resources management in terms of human capital investment, hiring practices, wages, and employment changes. Labor economics assists them in the determination of wages and hours of work in labor markets. Similarly personnel economics helps in knowing how the market conditions (demand and supply) affect the material advancement of both employers as well as employees; in terms of human resources it assists to explore how employers and employees navigate changes in levels of employment. The market conditions or movements in employment and unemployment are described through shifts in labor supply, labor demand, and wages. The shifts in the rate of employment depend on how quickly the market recovers from external shocks such as abrupt changes in interest rates, raw material prices, and demand for good or regulatory oversight. Highly relevant economic factors are customers, suppliers, competitors, and globalisation is taken into consideration by them for an effective planning and adapting as required.