chapter 3 performance management and strategic planning copyright © 2013 pearson education, inc....

Chapter 3Chapter 3

Performance Performance Management and Management and

Strategic PlanningStrategic Planning

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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

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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

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Strategic Planning: GoalStrategic Planning: Goal

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

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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

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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

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Strategic Planning : OverviewStrategic Planning : Overview

1.1. Environmental AnalysisEnvironmental Analysis

2.2. MissionMission

3.3. VisionVision

4.4. GoalsGoals

5.5. StrategiesStrategies

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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

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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

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External Trends—External Trends—Factors to ConsiderFactors to Consider

EconomicEconomic Political/Legal Political/Legal Social Social TechnologicalTechnological

CompetitorsCompetitors CustomersCustomers SuppliersSuppliers

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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

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Internal Trends— Internal Trends— Factors to ConsiderFactors to Consider

Organizational structureOrganizational structure Organizational cultureOrganizational culture PoliticsPolitics ProcessesProcesses SizeSize

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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)

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Gap Analysis Determines:Gap Analysis Determines:Opportunity +Opportunity + Strength = Strength =

LeverageLeverage

Opportunity + Weakness = Opportunity + Weakness = ConstraintConstraint

Threat + Strength = Threat + Strength = Vulnerability Vulnerability

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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?

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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

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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

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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

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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

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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

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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.

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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

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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)

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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

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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

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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

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States of America.States of America.

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