We often talk about HR initiatives driving economic outcomes for business. HR must be closely aligned to your business goals so it can support your goals and we can implement strategies to underpin your business needs.
A good place to start with defining your key strategic issues, is to consider both your external and internal environments. There are a number of different tool you can use here, but two of the most popular for external environments are a PESTEL analysis and Porters Five Forces.
A PESTEL analysis looks at the KEY DRIVERS for Change from the external environment. In looking at each of these areas, we are looking for trends, strong signals (and weak signals) as well as possible future implications.
The Acronym PESTEL stands for:
• P – Political Factors – what is happening in the political environment
• E – Economic Factors – where is the local economy at the moment – what about the global economy – what is likely to affect your business?
• S – Social Factors – are there changing cultures and demographics that will affect you?
• T – Technological Factors – how does the rise of new technology impact your business?
• E – Ecological Factors – Are there any environmental issues you need to be aware of?
• L – Legal Factors – any there legislative or regulatory constraints on your trading capacity?
Porter’s Five forces analysis also looks at external factors, focusing on the external competitive environment. If the forces in any one area are high, the industry will be more difficult to compete in.
• Threat of entry –Are their high or low barriers to entry?
• Threat of substitutes – can some other service or product substitute for yours?
• Power of buyer – How much power do the buyers hold?
• Power of suppliers – How much power do the suppliers hold?
• Extent of rivalry between competitors – Is there high level rivalry between existing competitors?
For example, Low barriers to entry, existing crowded markets, new entrants and increased competition for household discretionary spending may place your business in a difficult position.
The first step is to devise an organisational strategy, taking into account cultural references, history, goals and intentions. The aim is to develop alignment between existing culture, practises and market trends. There are many internal tools we can utilise to create strategy and then drive it forward through HR initiatives. We can drive differentiating strategies to give greater competitive advantage.
Once we know and understand the business strategy, HR initiatives can be vertically and horizontally integrated across the business to push these strategies forward.
Work processes, culture, rewards and recognition can all be aligned to the business strategy. To do this, you will need the assistance of a HR strategist, who can guide you and place your business on the path to the desired outcomes. Where do you find such a person … why 923|Recruitment & HR of course – give us a ring! 1300 923 000
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