Chapter 3Chapter 3ppPerformance Performance Management Management

and Strategic Planningand Strategic Planning

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OverviewOverview

D fi i i d P f S i D fi i i d P f S i Definition and Purposes of Strategic Definition and Purposes of Strategic PlanningPlanningLinking Performance Management to Linking Performance Management to the Strategic Planthe Strategic Plangg•• Strategic Planning Strategic Planning •• Developing Strategic Plans at the Unit LevelDeveloping Strategic Plans at the Unit Levelp g gp g g•• Job DescriptionsJob Descriptions•• Individual and Team PerformanceIndividual and Team Performance

Building SupportBuilding Support

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Strategic Planning: Definition Strategic Planning: Definition g gg g

Is a process that involvesIs a process that involves••Describe organization’s Describe organization’s ••Describe organization s Describe organization s destinationdestination

••Assess Assess barriersbarriers that stand in the that stand in the way of that destinationway of that destinationway of that destinationway of that destination

••Select approaches for Select approaches for moving forwardmoving forward

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Strategic Planning: GoalStrategic Planning: Goalg gg g

Allocate resources to provide Allocate resources to provide organization with competitive organization with competitive organization with competitive organization with competitive advantageadvantage

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Strategic Planning: PurposesStrategic Planning: Purposesg g pg g p1.1. Help define the organization’s Help define the organization’s p gp g

identityidentityH l i ti f H l i ti f 2.2. Help organization prepare for Help organization prepare for the futurethe future

3.3. Enhance ability to adapt to Enhance ability to adapt to i t l hi t l henvironmental changeenvironmental change

44 Provide focus and allow for Provide focus and allow for 4.4. Provide focus and allow for Provide focus and allow for better allocation of resourcesbetter allocation of resources

( ti d t lid )(continued on next slide)55

Strategic Planning: PurposesStrategic Planning: Purposesg g pg g p

55 Produce an organizational Produce an organizational 5.5. Produce an organizational Produce an organizational culture of cooperationculture of cooperation

6.6. Allow for the consideration of Allow for the consideration of new options and opportunitiesnew options and opportunitiesnew options and opportunitiesnew options and opportunities

7.7. Provide employees with Provide employees with o de e p oyees to de e p oyees tinformation to direct daily information to direct daily activitiesactivitiesactivitiesactivities

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Strategic Planning : OverviewStrategic Planning : Overviewg gg g

1.1. Environmental AnalysisEnvironmental Analysis22 MissionMission2.2. MissionMission3.3. VisionVision4.4. GoalsGoals5.5. StrategiesStrategies

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Environmental AnalysisEnvironmental Analysisyy

Identifies external and internal Identifies external and internal trendstrendstrendstrendsTo understand broad industry To understand broad industry issuesissuesTo make decisions using “big To make decisions using “big To make decisions using big To make decisions using big picture” contextpicture” context

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External trendsExternal trends

Opportunities:Opportunities:Opportunities:Opportunities:••environmental characteristics environmental characteristics that can that can helphelp the organization the organization that can that can helphelp the organization the organization succeedsucceed

Threats: Threats: eatseats••environmental characteristics environmental characteristics that can that can preventprevent the the that can that can preventprevent the the organization from being organization from being successfulsuccessfulsuccessfulsuccessful

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External trends External trends ––Factors to ConsiderFactors to Consider

EconomicEconomic CompetitorsCompetitorsPolitical/Legal Political/Legal S i l S i l

ppCustomersCustomersS liS liSocial Social

TechnologicalTechnologicalSuppliersSuppliers

gg

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External trends External trends ––Factors to ConsiderFactors to ConsiderFactors to ConsiderFactors to Consider

Factors Example issues

Economic Is there an economic recession on the horizon? Or, is the current economic recession likely to end in the near future? How would these economic trends affect our business?

Political/legal How will political changes domestically or in the international markets we are planning on entering affect our entry strategy?

Social What is the impact of an aging workforce on our organization?Social What is the impact of an aging workforce on our organization?

Technological What technological changes are anticipated in our industry and how will these changes affect how we do business?

Competitors How do the strategies and products of our competitors affect our own strategies and products? Can we anticipate our competitors’ next move?

Wh t d t t d h t ill th t i Customers What do our customers want now, and what will they want in the next five years or so? Can we anticipate such needs?

Suppliers What is the relationship with our suppliers now and is it likely to change and in what way in the near future?to change, and in what way, in the near future?

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Internal trendsInternal trends

Strengths:Strengths:•• internal characteristics that the internal characteristics that the •• internal characteristics that the internal characteristics that the organization can organization can use for its use for its d td tadvantageadvantage

Weaknesses:Weaknesses:Weaknesses:Weaknesses:•• internal characteristics that can internal characteristics that can hi d th hi d th f th f th hinder the successhinder the success of the of the organizationorganization

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Internal trends Internal trends ––Factors to ConsiderFactors to Consider

Organizational structureOrganizational structureggOrganizational cultureOrganizational culturePoliticsPoliticsProcessesProcessesProcessesProcessesSizeSizeSizeSize

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Internal trends Internal trends ––Factors to ConsiderFactors to ConsiderFactors to ConsiderFactors to Consider

F t E l iFactors Example issues

Organizational structure

Is the current structure conductive to fast and effective communication?structure

Organizational culture

Is the current organizational culture likely to encourage or hinder innovation and entrepreneurial behaviors on the part of culture hinder innovation and entrepreneurial behaviors on the part of middle-level managers?

Politics Are the various units competing for resources in such a way that any type of cross-unit collaboration is virtually impossible? Or are units likely to be open and collaborative in cross unit Or, are units likely to be open and collaborative in cross-unit projects?

Processes Are the supply chains working properly? Can customers reach us when they need to and receive a satisfying response when y y g pthey do?

Size Is the organization too small or too large? Are we growing too fast? Will we be able to manage growth (or downsizing) effectively?

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effectively?

Gap AnalysisGap Analysisyy

Analyzes:Analyzes:External environment External environment External environment External environment

(opportunities and threats)(opportunities and threats)

visvis--àà--visvis

Internal environmentInternal environmentInternal environmentInternal environment(strengths and weaknesses)(strengths and weaknesses)

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Gap analysis determines:Gap analysis determines:Gap analysis determines:Gap analysis determines:Opportunity Opportunity ++ Strength = Strength = LLLeverageLeverage

Opportunity Opportunity ++ Weakness = Weakness = C t i tC t i tConstraintConstraint

Threat Threat ++ Strength = Strength = Vulnerability Vulnerability Vulnerability Vulnerability

Threat Threat ++ Weakness = Weakness = ProblemProblem1616

Strategic Planning for the OrganizationStrategic Planning for the Organization

Environmental and Gap Environmental and Gap Analyses provide information Analyses provide information Analyses provide information Analyses provide information for organizations to decide:for organizations to decide:

Who they areWho they areWhat they doWhat they doWhat they doWhat they do

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MissionMission

A good A good missionmission statement answers:statement answers:Why does the organization exist?Why does the organization exist?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?Who are the customers served?Who are the customers served?What are the products or services What are the products or services ff d?ff d?offered?offered?

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Mission statement for the CocaMission statement for the Coca--Cola companyCola company

Everything we do is inspired by our enduring mission:To ef e h the o ld in bod mind nd pi it•To refresh the world………..in body, mind, and spirit

•To inspire moments of optimism……….through our brands and our actions•To create value and make a difference……….everywhere we engage.

To refresh the world To refresh the world -- Why Why does the does the yyorganization exist?organization exist?To create value and make a differenceTo create value and make a difference -- What What is is the scope of the organization’s activities?the scope of the organization’s activities?No info. No info. -- Who Who are the customers served?are the customers served?No info.No info. -- What What are the products or services are the products or services offered?offered?

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Mission Statement contains:Mission Statement contains:Information on organization’s

Basic product/service to be offered Does what?

Primary market/customer groups To whom?

Unique benefits and advantages of product/services

With what benefits?

Technology to be used

Concern for survival through growth and profitability

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Mission Statement Mission Statement maymay contain:contain:yy

Information on organization’s values Information on organization’s values and beliefsand beliefs

Managerial philosophyManagerial philosophyP bli i ht b P bli i ht b Public image sought by Public image sought by organizationorganizationSelfSelf--concept of business adopted concept of business adopted bybybyby

EmployeesEmployeesStockholdersStockholders

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VisionVisionVisionVision

Statement of future aspirationsStatement of future aspirationsFocuses attention on what is Focuses attention on what is Focuses attention on what is Focuses attention on what is importantimportantProvides context for evaluatingProvides context for evaluating

O t itiO t iti••OpportunitiesOpportunities••ThreatsThreatsThreatsThreats

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A Good Vision Statement:A Good Vision Statement:8 Characteristics8 Characteristics

1.1. BriefBrief 5.5. FocusedFocused2.2. VerifiableVerifiable 6.6. UnderstandableUnderstandable3.3. Bound by a Bound by a

TimelineTimeline7.7. InspiringInspiring88 A stretchA stretchTimelineTimeline

4.4. CurrentCurrent8.8. A stretchA stretch

Microsoft’s 1980s vision: Putting a computer on every desk and in every home

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and in every home.Microsoft’s 2000s vision: Putting a computer in every car and every pocket.

Purposes for Setting GoalsPurposes for Setting GoalsPurposes for Setting GoalsPurposes for Setting Goals

Formalize expected Formalize expected achievementsachievementsProvide motivationProvide motivationP id t ibl t t P id t ibl t t Provide tangible targets Provide tangible targets Provide basis for good decisionsProvide basis for good decisionsProvide basis for good decisionsProvide basis for good decisionsProvide basis for performance Provide basis for performance meas ementmeas ementmeasurementmeasurement

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StrategiesStrategiesStrategiesStrategies

C i G Pl C i G Pl Create strategies or Game Plans or Create strategies or Game Plans or “How to” procedures to address “How to” procedures to address

ffissues of:issues of:•• GrowthGrowth•• SurvivalSurvival•• TurnaroundTurnaroundTurnaroundTurnaround•• StabilityStability•• InnovationInnovation•• InnovationInnovation•• LeadershipLeadership

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How the HR Function contributes:How the HR Function contributes:

Communicate knowledge of Communicate knowledge of strategic planstrategic planstrategic planstrategic planProvide knowledge of KSAs Provide knowledge of KSAs needed for strategy needed for strategy implementationimplementationimplementationimplementationPropose reward systemsPropose reward systemsp yp y

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Strategic Plans at the Unit LevelStrategic Plans at the Unit LevelSt ateg c a s at t e U t e eSt ateg c a s at t e U t e e

Organization Organization Mission Mission statement Vision statement statement Vision statement statement, Vision statement, statement, Vision statement, Goals, and StrategiesGoals, and Strategies

Must clearly Must clearly alignalign withwithAnd And be congruentbe congruent withwithAnd And be congruentbe congruent withwith

EveryEvery Unit Unit Mission statement, Mission statement, Vision statement, Goals, and Vision statement, Goals, and StrategiesStrategiesStrategiesStrategies

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Alignment of Strategic Plan with Alignment of Strategic Plan with PerformancePerformance

Organization’s Strategic PlanMi i Vi i G l St t iMission, Vision, Goals, Strategies

U it’ St t i Pl Critical to involve all Unit’s Strategic PlanMission, Vision, Goals,

Strategies

levels of management

StrategiesJob Description

Tasks, KSAsCritical to involve all employees ,

I di id l d T P f

Critical to involve all employees

Individual and Team PerformanceResults, Behaviors, Developmental Plan 2828

Job DescriptionsJob DescriptionsJob DescriptionsJob Descriptions

Tasks and KSAs are Tasks and KSAs are congruent with Organization congruent with Organization congruent with Organization congruent with Organization and Unit strategic plansand Unit strategic plansActivities described support Activities described support mission and vision of mission and vision of mission and vision of mission and vision of Organization and UnitOrganization and Unit

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Individual and Team PerformanceIndividual and Team Performance

Organization and Unit mission, Organization and Unit mission, vision, goals lead tovision, goals lead to, g, gPerformance management system, Performance management system, whichwhichwhichwhich

Motivates employees Motivates employees Aligns development plans with Aligns development plans with organization prioritiesorganization prioritiesgg

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Strategic Plan Strategic Plan 6 Choices in PM System Design6 Choices in PM System Design6 Choices in PM System Design6 Choices in PM System Design

1.1. Criteria (Behavior vs. Results)Criteria (Behavior vs. Results)22 Participation (Low vs High)Participation (Low vs High)2.2. Participation (Low vs. High)Participation (Low vs. High)3.3. Temporal Dimension (Short Temporal Dimension (Short p (p (

Term vs. Long Term)Term vs. Long Term)

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Strategic Plan Strategic Plan 6 Choices in PM System Design 6 Choices in PM System Design (continued)(continued)

4.4. Level of Criteria (Individual vs. Level of Criteria (Individual vs. Team/Group)Team/Group)Team/Group)Team/Group)

5.5. System Orientation System Orientation (Developmental vs. (Developmental vs. Administrative)Administrative)Administrative)Administrative)

6.6. Rewards (Pay for Performance Rewards (Pay for Performance ( y( yvs. Tenure/Position)vs. Tenure/Position)

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Building Support Building Support ––Answering “What’s In It for Me?”Answering “What’s In It for Me?”

Top Management: Top Management: p gp g•• Help carry out visionHelp carry out vision

All levels: All levels: All levels: All levels: •• Involvement Involvement •• Participation Participation •• UnderstandingUnderstandingUnderstandingUnderstanding

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Quick ReviewQuick ReviewQuick ReviewQuick Review

Definition and Purposes of Strategic Definition and Purposes of Strategic Definition and Purposes of Strategic Definition and Purposes of Strategic PlanningPlanningLinking Performance Management to Linking Performance Management to the Strategic Planthe Strategic Planthe Strategic Planthe Strategic Plan•• Strategic Planning Strategic Planning •• Developing Strategic Plans at the Unit LevelDeveloping Strategic Plans at the Unit Level•• Developing Strategic Plans at the Unit LevelDeveloping Strategic Plans at the Unit Level•• Job DescriptionsJob Descriptions•• Individual and Team PerformanceIndividual and Team Performance•• Individual and Team PerformanceIndividual and Team Performance

Building SupportBuilding Support

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