What is an Internal Environment?

Definition: An internal environment is a set of elements that define the atmosphere within the company’s structure. It describes the way activities and relationships are carried out inside the business, normally within co-workers.

What Does Internal Environment Mean?

A company’s organizational structure consist in a set of daily interactions between employees. There is normally a hierarchical order that guarantees proper supervision and the way leadership is carried out will affect the business’ culture. This is an important aspect of the internal environment since leadership roles within the structure will serve as the starting point of culture creation.

A positive and encouraging internal environment has to be modeled from top to bottom and this a key role that top executives have to take care of. On the other hand, adequate compensation, rewards and benefits also have the power to create a healthy environment. If employees perceive that they are being properly compensated for their job duties their attitude towards work will be more positive.

Other elements such as training and career development programs, a friendly environment, a challenging job design and growth opportunities are also part of the internal environment of any company. Managers should always encourage a healthy internal structure in order to obtain more productive results.


Larry and Sergei are both employees of Polet Communications, a company that provides internet services for companies with high bandwidth requirements. Polet Communications was recently the winner of the Best Place to Work award for the state where it is based on. Larry and Sergei were interviewed by the organization that grants this award to answer a few questions about the way things are inside the company.

When they were asked about the internal environment they quickly responded that it was the best work experience they have had so far. The company is constantly challenging its employees to grow and to have a proactive kind of thinking. Problems are solved in a friendly environment by including the whole team in many different aspects of the business to give them a broad idea about things that are happening within the company. They both said that they feel they’ve found a place where they will be willing to work for the rest of their lives.