External factors are general business factors that occur outside of a company and affect how it conducts business. There are many external factors that can threaten the quality of a work environment. These range from the impact of a global disaster like Covid-19, to the challenge of keeping up with advances in technology or the pressure of staying relevant and competitive in a challenging market. And when it comes to national politics, a current example is the onset of stress in the lead up to South African elections in May 2024 – particularly in anticipating how political outcomes will impact on work and life in South Africa.
Here are six external factors that can affect the workplace
Global factors
1. Natural disasters
The impact of an epic disaster – either global or local – is often discussed in terms of its hard costs to counties, regions and business. But disasters take a detrimental toll on communities, families and workers. This reality was evident over the course of the Covid-19 pandemic as it disrupted the lives of individuals and the companies they serve. Ultimately, the pandemic precipitated the need to reinvent the workplace and amend work principles in terms of when and how employees work in order for organisations to continue operating. It was a challenge to maintain a work environment that sustained employee engagement and collaboration. Business has learned a lesson. It is essential for companies to have a plan in place that will mitigate the negative effects of any future natural disaster and to communicate this plan with employees.
2. Technological advancement
Today, more than ever before, technological tools are linked to employee productivity. As technology advances, companies continue to benefit by putting digital tools to effective use. The alternative is to face challenges brought about by falling behind. And if the company lags when it comes to digital uptake and knowhow, so do its employees. This can lead to losing technically competent employees to greener pastures. In addition, without adequate digital training, employees struggle to keep up with the demands of their roles, leading to frustration and a feeling of incompetence. When it comes to skilling and upskilling, ensuring a positive relationship with technical tools is one of the current cornerstones of modern business management.
National factors
3. Political outcomes
Politics is becoming more overtly divisive in South Africa. Regardless of a business leader’s political stance, it is important for their political viewpoints to not impinge on the rights of employees who hold a different view. Political disagreements in the workplace can cause all kinds of problems. It is important to squash any discrimination or harassment that may occur out of the difference between a majority and minority view. The stress of following daily political news can also negatively affect people’s mental wellbeing. Political outcomes, including failing infrastructure, inadequate transportation, unsafe neighbourhoods and rampant corruption, all affect the dynamics of mental and physical health. This has a direct impact on employee happiness and productivity. It is helpful to openly communicate with your team about events that impact day-to-day life – including political events. With South Africa’s elections in May 2024 in mind, it is possible to incorporate SA election month in these discussions with workers’ rights and wellbeing in mind. It is understood that your employees should be given time off work, if necessary, to vote.
4. Economic factors
The state of the global and national economy plays a significant role in every aspect of employees’ daily life from their personal financial wellbeing to job security and the ability of a company to flourish and grow. Economic factors impact job turnover, unemployment, immigration, income inequality and the overall business climate. When the economy is in a downward trend, businesses may have to work harder to keep their staff employed; to innovate and change their processes to continue earning revenue. These changes can affect the wellbeing of employees and morale in the workplace. Change needs to be managed to maintain employee confidence and motivation.
5. Industry competitive factors
A highly competitive market can influence the quality of a workplace environment. Yes, businesses are wise to stay relevant by keeping track of their competitors. It is important to identify and evaluate competitor successes and challenges and so determine what to avoid and what to incorporate into their own processes to prevent revenue loss and grow market share. However, it is the quality of their employees within a favourable work environment that can most effectively contribute to a company’s competitive advantage. This advantage comes from supporting quality work design, maintaining employee training and skills development, pursuing a positive organisational culture, and enabling employees to innovate and partake in creative problem-solving processes.
6. Sociocultural factors
External sociocultural factors can impact a company’s internal environment as they influence people’s feelings, values, beliefs, behaviors, attitudes and interactions. For example, societal attitudes about how women should be treated in the workplace have shifted dramatically in recent times. This also holds true for how gender roles are perceived. Social influence also includes the ethical side of a business, such as how a company treats its employees, consumers, and suppliers. An ethical business is one that considers the needs of all shareholders, not just the owners.
When it comes to external factors, a lack of predictability has become an essential part of the new business normal since Covid-19. Companies cannot eliminate external factors, but they can manage the impact. To do so, organisations need to stay up to date and well-informed. Conducting an annual environmental scan helps stay current and ensure the business can withstand threats and take advantage of opportunities. An environmental scan is not just beneficial for large corporations. Small to medium-sized businesses, who do not have the depth of resources of larger companies, can be extremely susceptible to the impact of external factors. Once leaders are equipped with information, communication is key. By educating and communicating with employees, companies protect the quality of the work environment and can better implement change.
Over to you for sharing your comments and experiences.
About the Author: Kerstin Jatho
Kerstin is the senior transformational coach and team development facilitator for 4Seeds Consulting. She is also the author of Growing Butterfly Wings, a book on applying positive psychology principles during a lengthy recovery. Her passion is to develop people-centred organisations where people thrive and achieve their potential in the workplace. You can find Kerstin on LinkedIn, Soundcloud, YouTube and Facebook.
