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Chapter 3Chapter 3
Performance Performance Management and Management and
Strategic PlanningStrategic Planning
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-11
OverviewOverview
Definition and Purposes of Strategic Definition and Purposes of Strategic PlanningPlanning
Linking Performance Management to Linking Performance Management to the Strategic Planthe Strategic Plan• Strategic Planning Strategic Planning • Developing Strategic Plans at the Unit LevelDeveloping Strategic Plans at the Unit Level• Job DescriptionsJob Descriptions• Individual and Team PerformanceIndividual and Team Performance
Building SupportBuilding Support
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-22
Strategic Planning: Definition Strategic Planning: Definition
ProcessProcess•Describe the organization’s Describe the organization’s
destinationdestination•Assess barriersAssess barriers•Select approaches for Select approaches for
moving forwardmoving forward
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-33
Strategic Planning: GoalStrategic Planning: Goal
Allocate resources to provide the Allocate resources to provide the organization with competitive organization with competitive advantageadvantage
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-44
Strategic Planning: PurposesStrategic Planning: Purposes Help define the organization’s identityHelp define the organization’s identity Help the organization prepare for the Help the organization prepare for the
futurefuture Enhance the ability to adapt to Enhance the ability to adapt to
environmental changeenvironmental change Provide focus and allow for better Provide focus and allow for better
allocation of resourcesallocation of resources
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-55
Strategic Planning: Purposes Strategic Planning: Purposes (Continued)(Continued)
Produce an organizational Produce an organizational culture of cooperationculture of cooperation
Allow for the consideration of Allow for the consideration of new options and opportunitiesnew options and opportunities
Provide employees with Provide employees with information to direct daily information to direct daily activitiesactivities
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-66
Strategic Planning : OverviewStrategic Planning : Overview
1.1. Environmental AnalysisEnvironmental Analysis
2.2. MissionMission
3.3. VisionVision
4.4. GoalsGoals
5.5. StrategiesStrategies
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-77
Environmental AnalysisEnvironmental Analysis
Identifies external and internal Identifies external and internal trendstrends
To understand broad industry To understand broad industry issuesissues
To make decisions using “big To make decisions using “big picture” contextpicture” context
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-88
External TrendsExternal Trends Opportunities:Opportunities:
• Environmental characteristics that Environmental characteristics that can can helphelp the organization succeed the organization succeed
Threats: Threats: • Environmental characteristics that Environmental characteristics that
can can preventprevent the organization from the organization from being successfulbeing successful
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-99
External Trends—External Trends—Factors to ConsiderFactors to Consider
EconomicEconomic Political/Legal Political/Legal Social Social TechnologicalTechnological
CompetitorsCompetitors CustomersCustomers SuppliersSuppliers
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-1010
Internal TrendsInternal Trends
Strengths:Strengths: • Internal characteristics that the Internal characteristics that the
organization can organization can use for its use for its advantageadvantage
Weaknesses:Weaknesses: • Internal characteristics that can Internal characteristics that can
hinder the successhinder the success of the of the organizationorganization
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-1111
Internal Trends— Internal Trends— Factors to ConsiderFactors to Consider
Organizational structureOrganizational structure Organizational cultureOrganizational culture PoliticsPolitics ProcessesProcesses SizeSize
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-1212
Gap AnalysisGap Analysis
Analyzes:Analyzes:External environment External environment
(opportunities and threats)(opportunities and threats)
vis-à-visvis-à-vis
Internal environmentInternal environment(strengths and weaknesses)(strengths and weaknesses)
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-1313
Gap Analysis Determines:Gap Analysis Determines:Opportunity +Opportunity + Strength = Strength =
LeverageLeverage
Opportunity + Weakness = Opportunity + Weakness = ConstraintConstraint
Threat + Strength = Threat + Strength = Vulnerability Vulnerability
Threat + Weakness = Threat + Weakness = ProblemProblem Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-1414
Strategic Planning for the Strategic Planning for the OrganizationOrganization
Environmental and Gap Environmental and Gap Analyses provide information Analyses provide information for organizations to decide:for organizations to decide:Who they areWho they areWhat they doWhat they do
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MissionMission
A good mission statement answers:A good mission statement answers: Why does the organization exist?Why does the organization exist? What is the scope of the What is the scope of the
organization’s activities?organization’s activities? Who are the customers served?Who are the customers served? What are the products or services What are the products or services
offered?offered?
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-1616
Mission Statement contains:Mission Statement contains:
Information on an organization’sInformation on an organization’s Basic product/service to be offeredBasic product/service to be offered Primary market/customer groupsPrimary market/customer groups Unique benefits and advantages of Unique benefits and advantages of
product/servicesproduct/services Technology to be usedTechnology to be used Concern for survival through Concern for survival through
growth and profitabilitygrowth and profitability
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-1717
Mission Statement Mission Statement MayMay Contain:Contain:
Information on an organization’s Information on an organization’s values and beliefsvalues and beliefs Managerial philosophyManagerial philosophy Public image sought by organizationPublic image sought by organization Self-concept of business adopted bySelf-concept of business adopted by
• EmployeesEmployees
• StockholdersStockholders
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VisionVision
Statement of future aspirationsStatement of future aspirations Focuses attention on what is Focuses attention on what is
importantimportant Provides context for evaluatingProvides context for evaluating
• OpportunitiesOpportunities• ThreatsThreats
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A Good Vision Statement:A Good Vision Statement: Eight CharacteristicsEight Characteristics
1.1. BriefBrief
2.2. VerifiableVerifiable
3.3. Bound by a TimelineBound by a Timeline
4.4. CurrentCurrent
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A Good Vision Statement:A Good Vision Statement: Eight Characteristics Eight Characteristics (Continued)(Continued)
5.5. FocusedFocused
6.6. UnderstandableUnderstandable
7.7. InspiringInspiring
8.8. A stretchA stretch
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Purposes for Setting GoalsPurposes for Setting Goals
Formalize expected achievementsFormalize expected achievements Provide motivationProvide motivation Provide tangible targets Provide tangible targets Provide the basis for good Provide the basis for good
decisionsdecisions Provide the basis for performance Provide the basis for performance
measurementmeasurement
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StrategiesStrategies
Create strategies, game plans or Create strategies, game plans or “How to” procedures to address “How to” procedures to address issues of:issues of:• GrowthGrowth• SurvivalSurvival• TurnaroundTurnaround• StabilityStability• InnovationInnovation• LeadershipLeadership
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-2323
How the HR Function How the HR Function Contributes:Contributes:
Communicate knowledge of Communicate knowledge of strategic planstrategic plan
Provide knowledge of KSAs Provide knowledge of KSAs needed for strategy needed for strategy implementationimplementation
Propose reward systemsPropose reward systems
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-2424
Strategic Plans at the Unit LevelStrategic Plans at the Unit Level
EveryEvery Unit Unit mission statement, mission statement, vision statement, goals, and vision statement, goals, and strategiesstrategies
Must clearly Must clearly alignalign with with
and and be congruentbe congruent with with thethe Organization’s Organization’s mission mission
statement, vision statement, statement, vision statement, goals, and strategiesgoals, and strategies
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Alignment of Strategic Plan with Alignment of Strategic Plan with PerformancePerformance
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Job DescriptionTasks, KSAs
Individual and Team PerformanceResults, Behaviors, Developmental Plan
Organization’s Strategic PlanMission, Vision, Goals, Strategies
Unit’s Strategic PlanMission, Vision, Goals, Strategies
Critical to involve all levels of
management
Critical to involve all employees
Strategic ConsensusStrategic Consensus
Definition: The state in which Definition: The state in which various organizational units various organizational units agree on a common set of agree on a common set of strategic prioritiesstrategic priorities• Predicts firm performancePredicts firm performance
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-2727
Two Ways to Achieve Strategic Two Ways to Achieve Strategic ConsensusConsensus
Strategies Strategies Goals Goals
vs.vs. Goals Goals Strategies Strategies
• Strategies Strategies Goals better predicts Goals better predicts firm performancefirm performance
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-2828
Job DescriptionsJob Descriptions
Tasks and KSAs are congruent Tasks and KSAs are congruent with Organization and Unit with Organization and Unit strategic plans.strategic plans.
Activities described support Activities described support mission and vision of mission and vision of Organization and Unit.Organization and Unit.
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-2929
Individual and Team Individual and Team PerformancePerformance
Organization and Unit mission, Organization and Unit mission, vision, goals lead to:vision, goals lead to:
Performance management system, Performance management system, which:which:Motivates employees Motivates employees Aligns development plans with Aligns development plans with
organization prioritiesorganization priorities
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-3030
Strategic Plan Strategic Plan Six Choices in PM System DesignSix Choices in PM System Design
1.1. Criteria (Behavior vs. Results)Criteria (Behavior vs. Results)
2.2. Participation (Low vs. High)Participation (Low vs. High)
3.3. Temporal Dimension (Short Temporal Dimension (Short Term vs. Long Term)Term vs. Long Term)
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Strategic Plan Strategic Plan Six Choices in PM System Design Six Choices in PM System Design
(Continued)(Continued)
4.4. Level of Criteria (Individual vs. Level of Criteria (Individual vs. Team/Group)Team/Group)
5.5. System Orientation (Developmental System Orientation (Developmental vs. Administrative)vs. Administrative)
6.6. Rewards (Pay for Performance vs. Rewards (Pay for Performance vs. Tenure/Position)Tenure/Position)
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-3232
Building Support—Building Support—Answering “What’s in It for Me?”Answering “What’s in It for Me?”
For top management support: For top management support: • Emphasize that PM helps carry out an Emphasize that PM helps carry out an
organization’s visionorganization’s vision For support from all levels: For support from all levels:
• Clearly communicate nature and Clearly communicate nature and consequences of PMconsequences of PM
• Involve employees in the process of Involve employees in the process of PM design and implementationPM design and implementation
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-3333
Quick ReviewQuick Review
Definition and Purposes of Strategic Definition and Purposes of Strategic PlanningPlanning
Linking Performance Management to Linking Performance Management to the Strategic Planthe Strategic Plan• Strategic Planning Strategic Planning • Developing Strategic Plans at the Unit LevelDeveloping Strategic Plans at the Unit Level• Job DescriptionsJob Descriptions• Individual and Team PerformanceIndividual and Team Performance
Building SupportBuilding Support
Copyright © 2013 Pearson Education, Inc. publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3-3434
All rights reserved. No part of this publication may be All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in reproduced, stored in a retrieval system, or transmitted, in
any form or by any means, electronic, mechanical, any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United written permission of the publisher. Printed in the United
States of America.States of America.
Copyright © 2013 Pearson Education, Inc. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hallpublishing as Prentice Hall
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