HR Jetpack

External Analysis

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External Analysis

Lesson Content

Now let’s pick back up on where we left off, formulating a strategy.

There are several steps to formulating a strategy and I will talk about each, and then ultimately connect them all to give you a clear picture.

The first step is to conduct an external analysis. So, what does that mean? You will essentially look at the environment outside of the organization and determine what has influence over the organization.

Some refer to this as Environmental Scanning, and during this scanning you will find opportunities and you will find threats, both of equal importance. It is important that there is not only awareness about these opportunities and threats, but also that adjustments are made, and that corrective action is taken. The external environment includes forces that an organization cannot control, and before I talk to you a little bit about each of the external environment factors, I want to introduce the acronym, PESTLE.

P stands for Political, E stands for Economic, S stands for Social, T stands for Technological, L stands for Legal, and E stands for Environmental. Let’s talk about each:

Politics. For example, at the time of this recording, in the US we have President Trump in the Whitehouse, and with his election, there have been changes that affected, or will affect, certain industries. Think about where you live and where you work.

What may be happening that could help or hinder your business? Then, in turn, what does this mean for you in HR? And how about government regulation changes and new or amended laws?

There is always something changing somewhere as it relates to regulations, it’s important as an HR professional that you keep up with these changes and become knowledgeable of the new or amended laws.

Now let’s think about the economy, how is the market doing right now? Is it booming with a high rate of employment? If so, this could mean that your competition is increasing and perhaps you should start hiring quicker and make the offers more attractive. Or on the other end, have you recently had to downsize because maintaining the amount of staff was simply too expensive? If so, what are the implications of the company downsizing?

Now let’s think about this from a societal standpoint. Think about how our priorities have changed over the last couple of decades in terms of work life balance. How does that and other priorities in today’s work affect your organization? As an example, with women making up half of the workforce, and at the same time growing their family and wanting to have quality time with their family, what implications may this have?

Moving onto technology, you and I both know that technology is constantly changing and it seems that now-a-days there is something new with technology every day, and it is arguably the most important thing for an organization to keep up with. If you think about Human Resource Information Systems that you see today, commonly known as HRIS, do you think these systems will stand the test of time as is? It’s likely they won’t, so think about that when you are planning. Perhaps make a recommendation that you move onto an HRIS that is cloud based.

What about legal? Two areas to consider, number 1, what laws have recently changed, or will change, that will affect your business in some capacity? And number 2, has there been legal action taken against an organization in the same industry as yours that is now shedding light on all the respective organizations? Health care jumps to mind. If the spotlight is negatively on the industry that you work in, this may affect business.

Now let’s think about changes in ecological conditions or the environment. Is the organization prepared for something to happen like a hurricane or another catastrophic weather system that may have damaging effects that affect how the organization operates? Think of the all the major weather events in the world. They are obviously having major damaging effects on people’s lives, and businesses.

And finally, how about changes in the demographics of the workforce? The word demographics holds a lot of weight, but as a brief overview, I will list what is included, age, disability, education, marital status, foreign born workers, race, and veterans. You can find your local information by going to the Bureau of Labor Statistics website at

Hayley Buonopane


Hayley Buonopane

With nearly two decades in the Human Resources field, Hayley is a subject matter expert with a specialty in workplace planning and development, employee relations, organizational development, and talent acquisition....

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