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Cultivate Critical Evaluation with a PESTLE Analysis

Deepen your evaluative skills by scanning the political, economic, social, technological, legal and environmental dimensions in which your company operates.

A silhouette of a man looking out of an open window.

The phone rings. It’s the operations manager asking for advice on how to talk to a member of his team who’s late for the third time this week. As soon as you hang up, your assistant presents you with a stack of resumes for the supervisory position that needs to be filled, um, yesterday. 

Then your boss asks you to come to her office to discuss that “incident” that happened last week, when two members of your team got into a heated argument. You nod politely, sigh and look down at the strategic workforce planning project on your desk that keeps getting pushed to the side because more-immediate fires need to be put out. 

Sound familiar? 

CEOs rely on their HR leaders to be experts in all areas relating to the company’s human capital. It’s your job to analyze which initiatives align with your organization’s goals and then develop, implement and manage them effectively. When you have well-communicated and well-run people programs in place that add value, employees feel respected. When employees feel respected, they are engaged in their jobs. And when they are engaged, they are more productive, turnover is low and the company grows. This is how HR creates value, and demonstrating that value is one way to bolster your career.

But how can you remain an expert in the ever-evolving workplace when there are so many day-to-day tasks and employee relations issues to tackle? Our work environments are in a constant state of change from forces inside and out. You might find it easier to anticipate and adapt to internal fluctuations, like a new policy or shift in strategy, than external ones—such as the evolution of performance management or new thinking around compensation. The trick to looking outward is to establish a plan for keeping up with what’s trending.

The traditional tool for conducting a strategic assessment is a SWOT, which focuses on organizational Strengths and Weaknesses, as well as external Opportunities and Threats. While useful, SWOT analyses only partially focus on outside influences. An option that can help you pay more attention to the external environment is a PESTLE analysis, in which you scan the Political, Economic, Social, Technological, Legal and Environmental trends shaping the world in which we operate. Here are some tips for ensuring you make the most of this important strategic activity: 

Schedule time to search. Schedule a regular appointment with yourself to scan the environment, even if it’s just 30 minutes per week. Friday mornings might work well; you can capture any ideas from meetings you’ve attended or conversations you’ve had that week and consider them in the context of trends that might affect your business, now or in the future. 

Depending on how you access your information, you might decide to run Internet searches in different dimensions of the PESTLE (such as “political influences on HR” one week and “environmental concerns for the workplace” another). Or, simply spend a few minutes every day checking your professional and personal social networks—HR-related LinkedIn groups or discussions on SHRM Connect are good places to start—and other news sources, including HR-related e-newsletters, such as HR Daily; major media outlets; and trade publications (may I humbly suggest HR Magazine?). Jot down any relevant trends that could align with your organization’s vision. 

Create a list of what’s trending. I keep a running list of trends in the back of my planner, which is always by my side and easily accessible—but others might prefer using their phone or a Word document. Use the PESTLE acronym as a reminder of the various areas that influence your business. 

For example, if you’re searching for new HR technology, you might run into Vera, an artificial intelligence (AI) robot that’s disrupting the talent acquisition world. Vera was created to interview applicants and present only the top-qualified candidates to recruiters so they can complete the selection process more efficiently. AI might not be an option for your company right now, but add it to your list of tech trends affecting HR. The idea is simply to brainstorm options that are intriguing to you and represent the changing landscape. 

One of the benefits I get from writing down trends as I come across them is that I can review them later. If I don’t take this step, I often find that I forget about any ideas I haven’t acted on immediately. This way, when I review my list six months from now, I can rediscover a range of options and possibly find the perfect solution to a problem I’m faced with at that time.

Identify how each development would impact your organization. Take a few minutes during your scheduled time to analyze whether it would be viable to pursue various trend-driven ideas right now. Some questions you can ask yourself are: 

  • What is the root cause of this trend? Where/when/why did it start?
  • How long is this trend expected to last? Might it be a fad or the product of marketing hype? Or is there reason to believe it is actually driving real change in how HR is practiced? 
  • How does this trend align with the organization’s goals?  
  • How does this development enhance a strength within the business or address a weakness?
  • Who might this affect in the organization, and how?
  • What opportunities and threats would it present to the business and employees? 
  • What is the return on investment for implementing a new program based on the trend? How long will it take to realize that return?

Now, whenever I hear about news related to HR or the workplace, my brain automatically sorts it into one of the PESTLE columns, which reminds me to ask myself the question “How will this political (or social, or economic, etc.) event or trend affect HR and the people in my business?”

Completing a regular scan of your external environment, whether it’s once a day, once a week or once a month, will sharpen your business acumen and help you critically evaluate how to move your company forward. When you find an initiative that will benefit your business, create an action plan and set up a time to consult with senior leadership. Following these steps will help you become a more strategic partner in your organization—without having to ignore whatever “incident” awaits you tomorrow.  

Jennifer Currence, SHRM-SCP, is an HR and talent development trainer and coach. She is the author of three books on HR competencies published by SHRM.


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