Six letters make the difference when you lay the foundation for your HR strategy. The recipe is called PESTEL. The basis of every strategy is a good analysis. PESTEL helps to structure it cleanly. I find it a cool recipe because it can be applied internally and externally. It gives us a head start when it comes to justifying measures. So here are the six letters, their meaning and their application for HR teams.
1. P for politics
Will our political system remain stable?
If you look outwards: How will we be affected by political decisions? These could be things like the consequences of the bilateral treaties with the EU or changes in the free movement of persons. Also, the quota discussion, paternity leave initiatives and policy initiatives such as the 1:12 have an impact on a future HR strategy.
If you look inwards: What corporate policy decisions are on the agenda? Which customer or product segments are in focus and what are the consequences for HR work?
2. E for Economy (economic environment)
How is the economic environment changing?
If you look at the outside world, it makes sense to deal with economic forecasts. How is the interest rate level developing and what does that mean for the employees’ pension fund? What about inflation and the consequences for wage development? How is unemployment developing? How does globalization affect how and where we hire people?
If you look inside, the question arises as to the health of your own company. How do sales figures, turnover and liquidity develop? How does a cost-cutting program affect the personnel strategy? What are the effects on personnel development?
3. S for social environment
What social and societal changes will affect us?
What are the social trends? Will the consumer behavior of our customers change? How do we respond to them? How is the educational landscape changing? Where is personnel policy affected by this?
Towards the inside: What is our generation mix like? What about diversity within the company? Health promotion? Are there cultural issues that need to be tackled? For example, in the case of a merger of parts of a company. How do we deal with new working models? Do we let entrepreneurial thinking people work in the sense of entrepreneurs?
4. T for technology
How is the technology developing and what does that mean for us?
Technologies such as software-as-a-service, new business models and automation are changing the world of work. Which technological innovations are changing the business? What effects do the availability of information and our constant availability have?
The internal view is about things like the acceleration of the internal exchange of information, remote work, the increased influence of artificial intelligence in the recruitment process. A new perspective on feedback systems, performance management and digital learning platforms. Data analysis also goes hand in hand with this. How can data-driven decisions be integrated into personnel strategy?
5. E for Environment
How is the environment changing and what does that mean for us?
How important are issues such as sustainability or the company’s CO2 footprint? Does global warming have an impact on our business activities? How can companies meet the demands of an increasingly environmentally conscious generation?
Do we want our employees to travel climate neutrally? Do we encourage commuting by train? What sustainable measures can we implement in the staff restaurant? Or are we planning measures relating to infrastructure such as the reduction of physical workplaces?
6. L for legal (legal environment)
Which legal requirements will occupy us in the near future?
Will the conditions of our contractual partners change? Do contracts have to be renegotiated? What are the signs? Regulations regarding minimum wages or working hours affect the personnel strategy.
Do new data protection regulations bind our internal resources? Or do contracts with new employees have to be completely revised? What is the legal situation with temporary employees like? Has our legal awareness changed?
The PESTEL analysis is an excellent tool when it comes to creating a starting point for the development of a strategy. It is a simple method to take a look at the big picture. Often parts of the PESTEL analysis are also used as a basis for a strengths/weaknesses and risk analysis (SWOT). The PESTEL analysis helps to recognize entrepreneurial challenges early and to approach them strategically in the sense of an early warning system.
I am deliberately suggesting that we also work out an internal view. This helps us to develop a contemporary strategy that takes a holistic view of our environment into account.