Internal and External Factors that impact the employment relationship

The employment relationship between the employer and employee can often be dynamic. There are many internal and external factors that impact the employment relationship. The environment in which we operate is in constant change or flux. To develop effective employee engagement, leadership and Human Resources teams need to be aware of the factors that can impact the relationship.

What is the employment relationship?

According to the ILO:

The employment relationship is the legal link between employers and employees. It exists when a person performs work or services under certain conditions in return for remuneration.

An effective HR role will ensure clarity in understanding. what the following means in the context of their organisation. And be able to explain it to managers and employees alike.

• Who is an employee?

• Who is an employer?

• When does an employment relationship exist?

• What is an ambiguous or disguised employment relationship?

The employment relationship needs to be clear and transparent. There are many instances where this is not the case. These situations include interns, contractors, volunteers etc.

Do you have clear and unambiguous relationships with your employees and workers?

Only when we are clear about the relationships can we look at exploring the impacts.

Internal and External Factors

In the past, we have written about SWOT Analysis and PESTLE Analysis. These are tools for looking at internal and external factors impacting organisations. Indeed our content is also used as part of the CIPD Factsheets – SWOT Factsheet PESTLE Factsheet.  In simple terms, the SWOT is the central model. Using Strengths & Weaknesses to look internally. And Opportunities & Threats looking externally.

To help break this down further and to ensure we explore all factors we can use the PESTLE and PRIMO-F models. This can give us a structure to cover all the bases. Having a structure helps to think about a range of factors. No framework can be totally encompassing. Frameworks can provide useful prompts.

PRIMO-F to look at the internal Strengths & weaknesses. PESTLE to look at Opportunities and Threats.

Where PESTLE is:

• Political
• Economic
• Social
• Technological
• Legal
• Environmental

and

Where PRIMO-F is:

• People
• Resources
• Innovation
• Marketing
• Operations
• Financial

Internal Factors that impact the employment relationship

Some example internal factors could include:

People

• What is the relationship with line managers?
• What are peer relations like?
• What are the company values?
• What is the culture?

Resources

• Do people have the tools and time to do good work
• Are people trained well
• Is the workspace fit for purpose?

Innovation

• Does the business welcome ideas and suggestions?
• How are people recognised for their contributions?

Marketing

• Are people involved in promoting the company/ brand?
• Are people engaged in product development?

Operations

• How easy is it for people to do good work?
• Are policies and procedures enabling or disabling people
• Are processes easy to follow and people friendly?

Financial

• Is there money to get what people need?
• Are people paid well for the role they do?

External Factors that impact the employment relationship

Some example external factors could include:

Political

• Gov policy impacting the work you do
• Unions
• Working hours etc

Economic

• Are people buying your products/ services?
• Are prices rising faster than your remuneration packages?

Social

• What is the public view of your brand?
• Demographics, what is changing that could unsettle your workforce?

Technological

• What changes to technology could enhance employability?
• What Changes to technology could make work difficult?

Legal

• What changes to law could cause people to look to change employment?
• What legal changes will make your people less employable?

Environmental

• Transport to and from the workplace
• What are your stakeholders saying that could unsettle people?

There are many internal and external factors that impact the employment relationship. As professionals, our role is to ensure the organisation has the people it needs to deliver its goals. Having the people available means attracting and retaining the right people.

The lists above are indicative factors. I am sure you can think of many more. feel free to add them in the comment below.