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PESTLE Analysis on an HR department or other internal function

While the PEST or PESTLE analysis is primarily aimed at looking at the external environment of an organization, many HR courses ask students to use the PEST or PESTLE analysis model to look at their own function.  In this context we need to imagine that the department (HR) is an organization in its own right and look outside.  Factors to include in your analysis may include the following:

  • Political
    • What is the culture of the organization,
    • How is the HR function viewed by other functions?
    • Who are the political champions of HR (or its adversaries)?
    • Shareholder views
  • Economic
    • What is the budgetary position of the department,
    • Is more money available?
    • Are our customers likely to spend more or less money on the services we offer?
    • What is happening to the financial status of the organization
    • Interest rates
    • Inflation
    • Salary trends in the sector
  • Sociological
    • Other departmental attitudes to HR
    • Population shifts (age profile)
    • Education
    • Fads
    • Diversity
    • Immigration/emigration
    • Health
    • Living standards
    • Housing trends
    • Fashion & role models
    • Age profile
    • Attitudes to career
  • Technological
    • What changes may be coming our way?
    • What new technology/ systems,
    • How do we record attendance, performance? how might this change?
    • Use of and encourage home working?
    • Communications technologies
    • changes of technology that will increase/ reduce the need for recruitment
    • changes to HR software
  • Legal
    • What is happening in our sector that will impact what we do?
    • Minimum wage,
    • Working time,
    • Food stuffs,
    • Under 18 working,
    • Occupational/ industrial Training etc.
    • What changes will impact the services of the organization
  • Environmental
    • Staff morale
    • Staff engagement
    • Need to reduce storage needs
    • Management attitudes (inside dept/ function)
    • Organizational culture

This is only a sample of the types of issues you may include. Use the topics listed in the template above to give you ideas and inspire you, just relate them to the rest of your organization and your ‘customers’.

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About Mike Morrison

Mike Morrison is a consultant and change agent specialising in developing skills in senior people to increase organizational performance.
Mike provides training & development in senior management, leadership, change management & other strategic programs to an international client base.
Mike is also founder & director of RapidBI, an organizational effectiveness consultancy.

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