The P.E.S.T. mnemonic is useful when reviewing of pressures from the
environment matters that any
business must respond to. It can be applied to how a business structures and
manages employer-employee relationships. The fact that a firm must adapt in
relation to internal or external labour force developments
is a leading argument for having a personnel function and specialists
in the first place. Such specialists offer themselves on the basis of
the value of their know-how, their capacity to make innovative
contributions to business adaptation and ability to provide essential
support systems/services to the business.
What does PEST mean?
| P . olitical/legal | E . conomic | S . ocial | T . echnological |
How employers and employees interact is a key ingredient of the job relationship. Employers want freedom of action in employing people or not employing them. The activities range across:
hire, train, instruct, reward, supervise, promote, counsel, make redundant, trust and be trusted by, rely on, dismiss .... their staff. They want employees to put in the best effort, be smart and expert, be loyal, be co-operative to the boss and fellow workers, be competitive (to rivals), be problem-solvers for the firm, be creative, represent the firm to its customers.
Employees - start, learn, perform well or indifferently (within the scope of their roles as defined by the employer) and go sick. They cost, display loyalty and enthusiasm and have accidents. They strike or behave unco-operatively. They retire or hand in their notice (such inconvenience and disloyalty). Employees want rewards, good conditions and rights. They want fairness/equity and opportunity. If expectations are not met they grumble. But most employees give only so much - not the whole of themselves. We may be resentful of our individuality being constrained beyond that we are prepared to give an employer.
The employment relationship is complex and characterised by inequalities in the balance of power between the parties. Some people are totally committed but some harbour resentments about their job, their rewards, their boss, their career/life situation. The employer wants loyal committed staff who offer value for money, who treat the employer's affairs as their own (even though they do not own a share in the business but merely receive wages).
Eventsd and transactions governing and affected by the employment relationship take place at
| national level | international level |
| industry level | company/unit level |
| senior management level | supervisory level |
| between individuals | between groups/collectives |
| formally | informally |
| inside work | outside work |
Examines of PEST factors that may require an employment policy response by a company are
| Political | government policies, employment legislation, European action, trade union pressure, shareholder interests and conflicts both institutionalised and informal. The notion of ethical power is also useful to consider |
| Economic | regulation in the labour market, business survival: prosperity and costs, levels of employment, inflation and rising wage levels, taxation, international competition, value added, consumer spending, industrial expansion/contraction, changes in organisational form - down-sizing and the flexible firm. |
| Social | population change and movements, the collective and the individual, men/women, skills shortage, education and training, managers' ability to win respect, motivation, attitudes and values/ethics, public relations and concepts of fairness. |
| Technological | exploitation of machine automation, communications and computing, affects on design of jobs, increased need for employee know-how |
PEST thus offers pointers to environmental influences we should understand to appreciate what personnel policies and practices are all about, their scope and modes of implementation.
If a manager lays claim to being a "personnel specialist" then he/she must be "business aware" able to evaluate what's going on in PEST terms in the employment environment. He/she can then ontribute useful advice/guidance and enable the business to develop/run effective systems of personnel support, regulation and control.
Clearly the employer-employee relationship (the wage-work bargain) is at the heart of the personnel function. A large multi-national employs tens of thousands across many sites and even continents. A small business may employ its first member of staff and immediately, legal obligations arise. Wages are paid for work done. We employ people directly. Our organisation is an assembly of jobs which come together in a productive system. If we do not employ our own staff, we sub-contract work to others - this changes the nature of "organisation" - how the assembly of jobs and people is held together (see Mintzberg).
