In order to ensure your approach to HR service delivery is realistic and achievable, you will
need to consider the external business environment. One useful model for analysing the
types of external forces acting upon an organisation, determining challenges and creating
opportunities for the business is the PEST model. PEST stands for:
As you develop strategies to deliver HR services, you will need to consider all four aspects
of the external environment. Let’s look at these in more detail.
Political environment
The political environment includes legislation and government legislative direction that
could affect what HR services are necessary and how they are delivered.
When determining the most appropriate model for the delivery of human resources
services it is important that human resources professionals consider the relevant
legislative requirements and organisational policies that may be impacted by the model
chosen.
Legislative requirements can include:
● award and enterprise agreements, and relevant industrial instruments
● mandatory compliance with industry codes of practice
● legislation that affects business operations such as:
○ the Fair Work Act 2009
○ work health and safety (OHS/WHS)
○ equal opportunity
○ anti-discrimination legislation.
Failing to consider these requirements could result in:
● employee grievances due to the organisation not complying with terms and
conditions set out by their applicable award, enterprise agreement or other
industrial instruments
● the organisation having a poor reputation in the marketplace for non-compliance
with industry codes of practice affecting its ability build alliances with industry
partners
● negative customer perceptions
● penalties for non-compliance from regulatory bodies
Section 1 – Develop Human Resources Delivery Strategies Student Workbook
1st edition version: 1 BSBHRM501 Manage human resource services
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● disgruntled employees due to the organisation’s failure to deliver against stated
policies and procedures
● negative employment brand in the marketplace impacting on the organisation’s
ability to attract and retain high performing team members.
Let’s look at an example political environment:
Example: Australian Hardware political environment
Relevant legislation may include, for example:
● Privacy Act 1988 (Cwlth)
● state-based anti-discrimination Acts
● Australian Securities and Investments Commission Act 2001 (Cwlth)
● Competition and Consumer Act 2010, including the Australian Consumer Law
(ACL).
Of particular interest for human resourcing is anti-discrimination legislation. Australian
Hardware needs to ensure HR services are delivered to meet the organisation’s legal
obligations with regard to fairness in recruitment practices or rewards and recognition,
for example.
Economic environment
The economic environment includes factors which affect the ability of organisations to
compete with other organisations and to maintain or improve profitability.
Example: Australian Hardware economic environment
Interestingly, sluggish growth and moderate increase in the Australian unemployment
figures may present an opportunity for hardware and home-improvement retailers such
as Australian Hardware. This opportunity exists despite other retailers suffering from
low consumer confidence, poor sales and overseas competition particularly through ecommerce.
Hardware retailers have benefitted from the sense among homeowners
that now is the time to choose renovation and home improvements rather than selling
and moving to an already renovated house.
According to IBISWorld, the trend towards home improvements is linked to the increase
in residential housing prices, which is due to the housing shortage and easier access to
finance and government incentives, amongst other factors. If current trends continue,
the industry is expected to grow by 23% from 2011 figures to reach $14.2 billion in
2016–17.2
2 IBISWorld, 2011, ‘Aussies Going Blockbusters for DIY’, IBISWorld Press Release.
Student Workbook Section 1 – Develop Human Resources Delivery Strategies
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From a human resourcing perspective, the economic environment is important for the
delivery of services. Naturally, Australian Hardware HR needs to ensure costs of
services are kept low enough to contribute to the achievement of profitability goals. HR
also needs to consider the changing marketplace in order to take a more strategic
approach to helping the organisation meet its need to provide value to customers. For
example, HR needs to consider customer needs related to the economic environment.
What are they able to or willing to pay? What economic forces might indicate a rise in
demand for some products or services? HR will need to consider how it can contribute
to helping the organisation meet the needs of customers through more effective and
targeted recruiting practices, rewards and recognition to retain the right people, and
partnering with the store managers and customer-facing employees to support their
needs.
Social environment
The social environment includes all demographic and psychographic factors (customers’
ways of thinking, values and lifestyle) that influence the organisation’s image and success
in marketing its products and services. The social environment may also have a more or
less direct influence on how an organisation may position itself as an employer and
attempt to attract the right people to work for it. Let’s look at another Australian Hardware
example.
Example: Australian Hardware social environment
Consumers are increasingly aware of the impact of business activity on the local
community. Consumers demand that businesses consider the impact of their activities
and work to promote healthy community involvement. Consumers are also becoming
more aware of working conditions in other countries want to contribute to better global
social and economic outcomes.
Consumers are also concerned about the environment. Australian Hardware will
endeavour to promote itself as environmentally and socially responsible and conduct
business operations accordingly. In this way, Australian Hardware will offer value to the
socially and environmentally aware consumer and position itself as a leader in social
and environmental responsibility.
From a human resourcing perspective, Australian Hardware needs to ensure the
delivery of HR services lives up to its environmental commitments. Australian Hardware
will also need to position itself as a responsible employer in order to attract talented
staff and staff who are committed to upholding and promoting values of Australian
Hardware.
Technological environment
The technological environment includes the rapidly changing telecommunications
environments including the rise of the internet as a business channel and e-commerce.
The technological environment also includes business tools to increase efficiency and
reduce the cost of delivering HR services to internal clients and gathering performance
information. Let’s look at an Australian Hardware example.
Section 1 – Develop Human Resources Delivery Strategies Student Workbook
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Example: Australian Hardware technological environment
Internet, information, and social networking technologies continue to evolve and
provide new challenges and opportunities for marketing. Australian Hardware will
continue with its effective use of its website to promote and sell products and social
networking to reach its target markets.
From an HR perspective, Australian Hardware will need to ensure its Human Resources
Management System (HRMS) is able to effectively manage such things as online payroll
and benefits enquiries, and self-management of leave enquiries and requests. The HR
management system will need to collect HR information on important metrics such as
leave hours, absences, and training requests and approvals, for example. The HRMS
will also need to integrate with existing systems for payroll and accounting as well as
the organisation’s resource planning (ERP) software system.
To reduce costs and stay competitive in a dynamic and rapidly changing technological
environment, Australian Hardware is considering outsourcing some automatic and selfserve
HR functions to a specialist organisation. Such a move may have the desired
effect of allowing Australian Hardware HR to focus less on routine tasks and take a
more strategic role in resource planning.
Learning activity: PEST analysis
Consider your own organisation or an organisation you would like to research. Research
the PEST environment and analyse its possible effect of the delivery of HR services.
Political
Economic
Social
Technological
Student Workbook Section 1 – Develop Human Resources Delivery Strategies
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Consult with managers
When determining strategies for the delivery of human resources services it is important
for human resources professionals to consult with line and senior managers. This
consultation will provide information regarding the human resources services needs of
the teams and departments that they manage. Senior managers will be able to provide a
more strategic perspective on the organisation’s need for services that advance the aims
of the business. On the other hand, it is important to gain the perspective and support of
line managers, who have a more direct relationship with customer-facing staff and often a
more intimate knowledge of operations. If it is your responsibility to propose
recommendations for HR changes, you will need to consult with a wide range of people:
those who must agree of have power of veto over your plans; those who must implement
your plans; those whose input you need to, for example, understand technical issues or a
variety of perspectives; and those who have final say and are responsible and
accountable for the decision to go ahead.
Consultation methods
There are a number of consultation methods that human resources professionals can use
to obtain information from managers regarding their human resources service needs.
These include the following.
● Meetings: Meetings are most effective for obtaining information regarding the
specific needs of a team or department. They are also an excellent opportunity to
engage managers in the design of the human resources strategy which will often
prove to be beneficial during implementation. Managers that are consulted with
during the design phase often feel like a valuable contributor and then are more
likely to actively support a successful implementation.
● One-on-one meetings/interviews: A one-on-one meeting is for situations where
feedback is obtained by speaking with one person at a time. This is particularly
important when trying to obtain very specific feedback or when the subject matter
maybe confidential or controversial and feedback where people might be
uncomfortable sharing the information with others or speaking in groups.
● Focus groups: Focus groups are used to consult with groups of people. They are
often the most time efficient method for obtaining information from large
departments that have several managers responsible for teams of employees who
all do the same thing. For example, a focus group could be used to consult with
managers in a call centre where the team members complete the same role under
the same work conditions.
● Surveys: Surveys are an excellent tool for obtaining information from large groups
of managers regarding their human resources needs. Surveys to obtain information
regarding human resources requirements could include the following questions.
○ How many roles have you recruited in the last 12 months?
○ What orientation and induction programs do you currently provide to newly
hired employees?
○ What training and development programs has your team participated in?
○ How many workplace injuries have occurred in your team in the last 12 months?
Section 1 – Develop Human Resources Delivery Strategies Student Workbook
1st edition version: 1 BSBHRM501 Manage human resource services
Page 18 of 121 © 2015 Innovation and Business Industry Skills Council Ltd
Learning activity: Consulting with managers
Consider your organisation, or an organisation you would like to research.
● What managers or stakeholders would need to be consulted on HR requirements
in order to meet business needs?
Develop a survey that you could provide to managers or other stakeholders to obtain
information regarding their human resources service requirements.
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