Chapter 3 Performance Management and Strategic Planning Copyright

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Chapter 3 Performance Management and Strategic Planning Copyright © 2013 Pearson Education, Inc. publishing

Chapter 3 Performance Management and Strategic Planning Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -1

Strategic Planning: Definition A process that involves: • Describing an organization’s destination • Assessing

Strategic Planning: Definition A process that involves: • Describing an organization’s destination • Assessing barriers that stand in the way of that destination • Selecting approaches for moving forward Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -2

Strategic Planning: Goal The main goal of strategic planning is to allocate resources in

Strategic Planning: Goal The main goal of strategic planning is to allocate resources in a way that provides the organization with a competitive advantage. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -3

Strategic Planning: Purposes Helps define an organization’s identity. Helps an organization prepare for the

Strategic Planning: Purposes Helps define an organization’s identity. Helps an organization prepare for the future. Enhances the ability of an organization to adapt to environmental change. Provides an organization with focus and allows it to better allocate its resources. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -4

Strategic Planning: Purposes (Continued) Helps produce an organizational culture of cooperation which can gain

Strategic Planning: Purposes (Continued) Helps produce an organizational culture of cooperation which can gain an organization a competitive advantage. Allows an organization to consider new options and opportunities. Provides employees with information to guide their daily activities. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -5

Strategic Planning : Overview 1. 2. 3. 4. 5. Environmental Analysis (may also be

Strategic Planning : Overview 1. 2. 3. 4. 5. Environmental Analysis (may also be performed after the mission and vision are created) Mission Vision Goals Strategies Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -6

Environmental Analysis Identifies external and internal trends. The former are called opportunities and threats.

Environmental Analysis Identifies external and internal trends. The former are called opportunities and threats. The latter are called strengths and weaknesses. To understand broad industry issues. To make decisions using “big picture” context. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -7

External Trends n Opportunities: • Environmental characteristics that can help the organization succeed. n

External Trends n Opportunities: • Environmental characteristics that can help the organization succeed. n Threats: • Environmental characteristics that can prevent the organization from being successful. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -8

External Trends Some Factors to Consider n n Economic Political/Legal Social Technological n n

External Trends Some Factors to Consider n n Economic Political/Legal Social Technological n n n Competitors Customers Suppliers (see page 66 of the textbook) Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -9

Internal Trends n Strengths: • Internal characteristics that the organization can use to its

Internal Trends n Strengths: • Internal characteristics that the organization can use to its advantage. n Weaknesses: • Internal characteristics that can hinder the success of the organization. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -10

Internal Trends Some Factors to Consider Organizational structure n Organizational culture n Politics n

Internal Trends Some Factors to Consider Organizational structure n Organizational culture n Politics n Processes n Size (see page 67 of the textbook) n Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -11

Gap Analysis Information regarding opportunities, threats, strengths, and weaknesses is used to conduct a

Gap Analysis Information regarding opportunities, threats, strengths, and weaknesses is used to conduct a gap analysis. A gap analysis analyzes: External environment (opportunities and threats) vis-à-vis Internal environment (strengths and weaknesses) Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -12

Gap Analysis (continued) The pairing of Os, Ts, Ss, and Ws, leads to the

Gap Analysis (continued) The pairing of Os, Ts, Ss, and Ws, leads to the following situations: Opportunity + Strength = Leverage (there is an O in the environment and a S to take advantage of the O). Opportunity + Weakness = Constraint (an O is present but there is no S to take advantage of it). Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -13

Gap Analysis (continued) Threat + Strength = Vulnerability (a T is present but it

Gap Analysis (continued) Threat + Strength = Vulnerability (a T is present but it can be contained by an S). Threat + Weakness = Problem (worst case scenario when there is a T and an accompanying W). Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 14

Strategic Planning for the Organization Environmental and Gap Analyses provide information for organizations to

Strategic Planning for the Organization Environmental and Gap Analyses provide information for organizations to decide: ØWho they are ØWhat they do Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -15

Mission A good mission statement answers the questions: ü Why does the organization exist?

Mission A good mission statement answers the questions: ü Why does the organization exist? ü What is the scope of the organization’s activities? ü Who are the customers served? ü What are the products or services offered? Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -16

A Mission Statement contains: Information on an organization’s § Basic product or service to

A Mission Statement contains: Information on an organization’s § Basic product or service to be offered. § Primary market(s) or customer groups to be served. § Unique benefits and advantages of product or services. § Technology to be used in production. § Concern for survival through growth and profitability. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -17

A Mission Statement May Contain: Information about the organization’s values and beliefs, including: §

A Mission Statement May Contain: Information about the organization’s values and beliefs, including: § Managerial philosophy. § Public image sought by the organization. § Self-concept of business adopted by employees and stockholders. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -18

Vision Statement of future aspirations (what the organization would like to become in about

Vision Statement of future aspirations (what the organization would like to become in about 10 years). n Focuses employee’s attention on what is important. n Provides context for evaluating n • Opportunities • Threats Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -19

A Good Vision Statement: Eight Characteristics 1. 2. 3. 4. Brief (one sentence). Verifiable.

A Good Vision Statement: Eight Characteristics 1. 2. 3. 4. Brief (one sentence). Verifiable. Bound by a Timeline (specifies a timeline for fulfillment of aspirations). Current (vision statements should be updated periodically). Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -20

A Good Vision Statement: Eight Characteristics (Continued) 5. 6. 7. 8. Focused on just

A Good Vision Statement: Eight Characteristics (Continued) 5. 6. 7. 8. Focused on just a few aspects of an organization. Understandable (clearly written and straightforward). Inspiring (make employee’s feel good about their organization’s direction). A stretch Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -21

Setting Goals n n n Formalizes what the organization hopes to achieve. Provides motivation

Setting Goals n n n Formalizes what the organization hopes to achieve. Provides motivation for employees. Provides tangible targets. Provides the basis for making good decisions. Provides the basis for performance measurement. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -22

Strategies n Create strategies (game plans or “how to” procedures) to achieve the organization’s

Strategies n Create strategies (game plans or “how to” procedures) to achieve the organization’s goals. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -23

How the HR Function Contributes: n n n Communicates knowledge of strategic plan. Provides

How the HR Function Contributes: n n n Communicates knowledge of strategic plan. Provides knowledge of the KSAs that are needed for successful strategy implementation. Proposes reward systems to motivate employees to implement strategies properly. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -24

Strategic Plans at the Unit Level Every unit’s mission statement, vision statement, goals, and

Strategic Plans at the Unit Level Every unit’s mission statement, vision statement, goals, and strategies must clearly align with and be congruent with the organization’s mission statement, vision statement, goals, and strategies Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -25

Alignment of Strategic Plan with Performance Organization’s Strategic Plan Mission, Vision, Goals, Strategies Unit’s

Alignment of Strategic Plan with Performance Organization’s Strategic Plan Mission, Vision, Goals, Strategies Unit’s Strategic Plan Mission, Vision, Goals, Strategies Critical to involve all employees Critical to involve all levels of management Job Description Tasks, KSAs Individual and Team Performance Results, Behaviors, Developmental Plan Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -26

Job Descriptions n n Tasks and KSAs are congruent with the organization’s and its

Job Descriptions n n Tasks and KSAs are congruent with the organization’s and its units’ strategic plans. Activities described support the mission and vision of the organization and its units. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -27

Individual and Team Performance Organization and unit mission, vision, and goals lead to a:

Individual and Team Performance Organization and unit mission, vision, and goals lead to a: performance management system which motivates employees and aligns development plans with the organization’s priorities. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -28

Building Support Answering “What’s in It for Me? ” n n To gain top

Building Support Answering “What’s in It for Me? ” n n To gain top management support: • Emphasize that PM can serve as a primary tool to realize an organization’s vision. To gain support from all levels in the organization: • Clearly communicate the nature and consequences of PM. • Involve all employees in the process of PM design and implementation. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 -29