Chapter 3 Performance Management and Strategic Planning Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-1 Overview ➢ ➢ Definition and Purposes of Strategic Planning Linking Performance Management to the Strategic Plan • • • • ➢ Strategic Planning Developing Strategic Plans at the Unit Level Job Descriptions Individual and Team Performance Building Support Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-2 Strategic Planning: Definition ◼ Process •Describe the organization’s destination •Assess barriers •Select approaches for moving forward Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-3 Strategic Planning: Goal ◼ Allocate resources to provide the organization with competitive advantage Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-4 Strategic Planning: Purposes ✓ ✓ ✓ ✓ Help define the organization’s identity Help the organization prepare for the future Enhance the ability to adapt to environmental change Provide focus and allow for better allocation of resources Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-5 Strategic Planning: Purposes (Continued) Produce an organizational culture of cooperation ✓ Allow for the consideration of new options and opportunities ✓ Provide employees with information to direct daily activities ✓ Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-6 Strategic Planning : Overview 1. 2. 3. 4. 5. Environmental Analysis Mission Vision Goals Strategies Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-7 Environmental Analysis Identifies external and internal trends ◼ ◼ To understand broad industry issues To make decisions using “big picture” context Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-8 External Trends ◼ Opportunities: • Environmental characteristics that can help the organization succeed ◼ Threats: • Environmental characteristics that can prevent the organization from being successful Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-9 External Trends— Factors to Consider ◼ ◼ ◼ ◼ Economic Political/Legal Social Technological ◼ ◼ ◼ Competitors Customers Suppliers Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-10 Internal Trends ◼ Strengths: • Internal characteristics that the organization can use for its advantage ◼ Weaknesses: • Internal characteristics that can hinder the success of the organization Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-11 Internal Trends— Factors to Consider ◼ ◼ ◼ ◼ ◼ Organizational structure Organizational culture Politics Processes Size Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-12 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 3-13 Gap Analysis Determines: ➢Opportunity + Strength = Leverage ➢Opportunity + Weakness = Constraint ➢Threat + Strength = Vulnerability ➢Threat + Weakness = Problem Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-14 Strategic Planning for the Organization Environmental and Gap Analyses provide information for organizations to decide: ➢Who they are ➢What they do Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-15 Mission A good mission statement answers: ✓ Why does the organization exist? ✓ What is the scope of the organization’s activities? ✓ Who are the customers served? ✓ What are the products or services offered? Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-16 Mission Statement contains: Information on an organization’s ▪ Basic product/service to be offered ▪ Primary market/customer groups ▪ Unique benefits and advantages of product/services ▪ Technology to be used ▪ Concern for survival through growth and profitability Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-17 Mission Statement May Contain: Information on an organization’s values and beliefs ▪ Managerial philosophy ▪ Public image sought by organization ▪ Self-concept of business adopted by • Employees • Stockholders Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-18 Vision ◼ ◼ ◼ Statement of future aspirations Focuses attention on what is important Provides context for evaluating • Opportunities • Threats Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-19 A Good Vision Statement: Eight Characteristics 1. 2. 3. 4. Brief Verifiable Bound by a Timeline Current Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-20 A Good Vision Statement: Eight Characteristics (Continued) 5. 6. 7. 8. Focused Understandable Inspiring A stretch Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-21 Purposes for Setting Goals ◼ ◼ ◼ ◼ ◼ Formalize expected achievements Provide motivation Provide tangible targets Provide the basis for good decisions Provide the basis for performance measurement Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-22 Strategies ◼ Create strategies, game plans or “How to” procedures to address issues of: • Growth • Survival • Turnaround • Stability • Innovation • Leadership Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-23 How the HR Function Contributes: ◼ ◼ ◼ Communicate knowledge of strategic plan Provide knowledge of KSAs needed for strategy implementation Propose reward systems Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-24 Strategic Plans at the Unit Level ◼ Every Unit 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 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 Strategic Consensus ◼ Definition: The state in which various organizational units agree on a common set of strategic priorities • Predicts firm performance Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-27 Two Ways to Achieve Strategic Consensus ◼ ◼ Strategies → Goals vs. Goals → Strategies • Strategies → Goals better predicts firm performance Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-28 Job Descriptions ◼ ◼ Tasks and KSAs are congruent with Organization and Unit strategic plans. Activities described support mission and vision of Organization and Unit. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-29 Individual and Team Performance Organization and Unit mission, vision, goals lead to: ➢ Performance management system, which: ✓Motivates employees ✓Aligns development plans with organization priorities Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-30 Strategic Plan → Six Choices in PM System Design 1. 2. 3. Criteria (Behavior vs. Results) Participation (Low vs. High) Temporal Dimension (Short Term vs. Long Term) Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-31 Strategic Plan → Six Choices in PM System Design (Continued) 4. 5. 6. Level of Criteria (Individual vs. Team/Group) System Orientation (Developmental vs. Administrative) Rewards (Pay for Performance vs. Tenure/Position) Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-32 Building Support— Answering “What’s in It for Me?” ◼ For top management support: • Emphasize that PM helps carry out an organization’s vision ◼ For support from all levels: • Clearly communicate nature and consequences of PM • Involve employees in the process of PM design and implementation Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-33 Quick Review ➢ ➢ Definition and Purposes of Strategic Planning Linking Performance Management to the Strategic Plan • • • • ➢ Strategic Planning Developing Strategic Plans at the Unit Level Job Descriptions Individual and Team Performance Building Support Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-34 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3-35
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