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Strategy Implementation: Staffing and Directing

Chapter 10

Learning Objectives

Understand the link between strategy and staffing decisions

Match the appropriate manager to the strategy

Understand how to implement an effective downsizing program

Discuss important issues in effectively staffing and directing international expansion

Assess and manage the corporate culture’s fit with a new strategy

Formulate effective action plans when MBO and TQM are determined to be appropriate methods of strategy implementation

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After reading this chapter, you should be able to:

Understand the link between strategy and staffing decisions

Match the appropriate manager to the strategy

Understand how to implement an effective downsizing program

Discuss important issues in effectively staffing and directing international expansion

Assess and manage the corporate culture’s fit with a new strategy

Formulate effective action plans when MBO and TQM are determined to be appropriate methods of strategy implementation

Integration Managers

Prepare a competitive profile of the company in terms of its strengths and weaknesses

Draft a profile of what the ideal combined company should look like

Develop action plans to close the gap between actual and ideal

Establish training programs to unite the combined company and make it more competitive

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To deal with integration issues such as these, some companies are appointing special integration managers to shepherd companies through the implementation process. The job of the integrator is to prepare a competitive profile of the combined company in terms of its strengths and weaknesses, draft an ideal profile of what the combined company should look like, develop action plans to close the gap between the actuality and the ideal and establish training programs to unite the combined company and make it more competitive.

Staffing

To be a successful integration manager, a person should have:

Deep knowledge of the acquiring company

Flexible management style

Ability to work in cross-functional teams

Willingness to work independently

Sufficient emotional and cultural intelligence to work in a diverse environment

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To be a successful integration manager, a person should have (1) a deep knowledge of the acquiring company, (2) a flexible management style, (3) an ability to work

in cross-functional project teams, (4) a willingness to work independently and (5) sufficient emotional and cultural intelligence to work well with people from all backgrounds.

Staffing Follows Strategy

One way to implement a company’s business strategy, such as overall low cost, is through training and development.

Executive characteristics influence strategic outcomes for a corporation.

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One way to implement a company’s business strategy, such as overall low cost, is through training and development.

Executive characteristics influence strategic outcomes for a corporation.

Matching the Manager to the Strategy

Executive type

executives with a particular mix of skills and experiences

paired with a specific corporate strategy

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Executives with a particular mix of skills and experiences may be classified as an executive type and paired with a specific corporate strategy.

Executive Types

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A corporation following a concentration strategy emphasizing vertical or horizontal growth would probably want an aggressive new chief executive with a great deal of experience in that particular industry—a dynamic industry expert. A diversification strategy, in contrast, might call for someone with an analytical mind who is highly knowledgeable in other industries and can manage diverse product lines—an analytical portfolio manager. A corporation choosing to follow a stability strategy would probably want as its CEO a cautious profit planner, a person with a conservative style, a production or engineering background and experience with controlling budgets, capital expenditures, inventories and standardization procedures. Weak companies in a relatively attractive industry tend to turn to a type of challenge-oriented executive known as a turnaround specialist to save the company. If a company cannot be saved, a professional liquidator might be called on by a bankruptcy court to close the firm and liquidate its assets.

Dynamic industry expert

Analytical portfolio manager

Cautious profit planner

Turnaround specialist

Professional liquidator

Selection and Management Development

Executive succession

process of replacing a key top manager

Succession planning

identifying candidates below the top layer of management

measuring internal candidates against external candidates

providing financial incentives

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Executive succession is the process of replacing a key top manager. Some of the best practices for top management succession are encouraging boards to

help the CEO create a succession plan, identifying succession candidates below the top layer, measuring internal candidates against outside candidates to ensure the development of a comprehensive set of skills and providing appropriate financial incentives.

Identifying Abilities and Potential

Performance appraisal systems identify good performers with promotion potential.

Assessment centers evaluate a person’s suitability for an advanced position.

Job rotation ensures employees are gaining a mix of experience to prepare them for future responsibilities.

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A company can identify and prepare its people for important positions in several ways. One approach is to establish a sound performance appraisal system to identify good performers with promotion potential. Many large organizations are using assessment centers to evaluate a person’s suitability for an advanced position. Job rotation—moving people from one job to another—is also used in many large corporations to ensure that employees are gaining the appropriate mix of experiences to prepare them for future responsibilities.

Problems in Retrenchment

Downsizing

the planned elimination of positions or jobs

also called “rightsizing” or “resizing”

Can damage the learning capacity of an organization

Creativity drops significantly and it becomes very difficult to keep high performers from leaving the company

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Downsizing (sometimes called “rightsizing” or “resizing”) refers to the planned elimination of positions or jobs. Because the survivors often didn’t know how to do the work of those who had left the company, morale and productivity plummeted. Downsizing can seriously damage the learning capacity of organizations. Creativity drops significantly (affecting new product development), and it becomes very difficult to keep high performers from leaving the company

Guidelines for Successful Downsizing

Eliminate unnecessary work instead of making across the board cuts

Contract out work that others can do cheaper

Plan for long-run efficiencies

Communicate the reasons for actions

Invest in the remaining employees

Develop value added jobs to balance out job elimination

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Consider the following guidelines that have been proposed for successful downsizing:

Eliminate unnecessary work instead of making across the board cuts

Contract out work that others can do cheaper

Plan for long-run efficiencies

Communicate the reasons for actions

Invest in the remaining employees

Develop value added jobs to balance out job elimination

International Issues in Staffing

Companies that do a good job of managing foreign assignments follow three general practices:

When making international assignments, they focus on transferring knowledge and developing global leadership.

They make foreign assignments to people whose technical skills are matched or exceeded by their cross-cultural abilities.

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One study of 750 U.S., Japanese, and European companies, found that the companies that do a good job of managing foreign assignments follow three general practices:

■ When making international assignments, they focus on transferring knowledge and developing global leadership.

■ They make foreign assignments to people whose technical skills are matched or exceeded by their cross-cultural abilities.

International Issues in Staffing

They end foreign assignments with a deliberate repatriation process, with career guidance and jobs where the employees can apply what they learned in their assignments.

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They end foreign assignments with a deliberate repatriation process, with career guidance and jobs where the employees can apply what they learned in their assignments.

International Issues in Staffing

Stealth expatriates

managers that are either cross-border commuters (especially in the EU) or the accidental expatriate who goes on many business trips or temporary assignments due to offshoring and/or international joint ventures

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Because an increasing number of multinational corporations are primarily organized around business units and product lines instead of geographic areas, product and SBU managers who are based at corporate headquarters are often traveling around the world to work personally with country managers. These managers and other mobile workers are being called stealth expatriates because they are either cross-border commuters (especially in the EU) or the accidental expatriate who goes on many business trips or temporary assignments due to offshoring and/or international joint ventures.

Leading

Implementation

involves leading and coaching people to use their abilities and skills most effectively and efficiently to achieve organizational objectives

Without direction, people tend to do their work according to their personal view of what tasks should be done, how and in what order.

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Implementation also involves leading through coaching people to use their abilities and skills most effectively and efficiently to achieve organizational objectives.

Without direction, people tend to do their work according to their personal view of what tasks should be done, how and in what order.

Managing Corporate Culture

Strong cultures are resistant to change.

Optimal culture supports mission and strategies.

Management must evaluate what a particular change in strategy means to the corporate culture, assess whether a change in culture is needed and decide whether an attempt to change the culture is worth the likely costs.

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Corporate culture has a strong tendency to resist change because its very reason for existence often rests on preserving stable relationships and patterns of behavior.

An optimal culture is one that best supports the mission and strategy of the company of which it is a part. This means that corporate culture should support the strategy. Management must evaluate what a particular change in strategy means to the corporate culture, assess whether a change in culture is needed and decide whether an attempt to change the culture is worth the likely costs.

Assessing Strategy—Culture Compatibility

Is the proposed strategy compatible with the company’s current culture?

Can the culture be easily modified to make it more compatible with the new strategy?

Is management willing and able to make major organizational changes and accept probable delays and a likely increase in costs?

Is management still committed to implementing the strategy?

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Consider the following questions regarding a corporation’s culture:

Is the proposed strategy compatible with the company’s current culture?

Can the culture be easily modified to make it more compatible with the new strategy?

Is management willing and able to make major organizational changes and accept probable delays and a likely increase in costs?

Is management still committed to implementing the strategy?

Assessing Strategy—Culture Compatibility

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Figure 10-1

When implementing a new strategy, a company should take the time to assess strategy-culture compatibility. (See Figure 10–1.)

Managing Cultural Change Through Communication

Companies in which major cultural changes have successfully taken place had the following characteristics in common:

The CEO and other top managers had a strategic vision of what the company could become and communicated that vision to employees at all levels.

The vision was translated into the key elements necessary to accomplish that vision.

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Companies in which major cultural changes have successfully taken place had the following characteristics in common:

The CEO and other top managers had a strategic vision of what the company could become and communicated that vision to employees at all levels.

The vision was translated into the key elements necessary to accomplish that vision.

Methods of Managing the Culture of an Acquired Firm

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Figure 10-2

There are four general methods of managing two different cultures. (See Figure 10–2.)

Methods of Managing the Culture of an Acquired Firm

The choice of which method to use should be based on:

How much members of the acquired firm value preserving their own culture

How attractive they perceive the culture of the acquirer to be

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The choice of which method to use should be based on (1) how much members of the acquired firm value preserving their own culture and (2) how attractive they perceive the culture of the acquirer to be.

Methods of Managing the Culture of an Acquired Firm

Integration

involves a relatively balanced give-and-take of cultural and managerial practices between the merger partners, and no strong imposition of cultural change on either company

Assimilation

involves the domination of one organization over the other

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Integration involves a relatively balanced give-and-take of cultural and managerial practices between the merger partners, and no strong imposition of cultural change on either company.

Assimilation involves the domination of one organization over the other.

Methods of Managing the Culture of an Acquired Firm

Separation

characterized by a separation of the two companies’ cultures

Deculturation

involves the disintegration of one company’s culture resulting from unwanted and extreme pressure from the other to impose its culture and practices

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Separation is characterized by a separation of the two companies’ cultures.

Deculturation involves the disintegration of one company’s culture resulting from unwanted and extreme pressure from the other to impose its culture and practices.

Action Planning

Action plan

states what actions are going to be taken, by whom, during what time frame and with what expected results

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Activities can be directed toward accomplishing strategic goals through action planning. At a minimum, an action plan states what actions are going to be taken, by whom, during what time frame and with what expected results.

Action Planning

Specific actions to be taken to make the program operational

Dates to begin and end each action

Person responsible for carrying out each action

Person responsible for monitoring the timeliness and effectiveness of each action

Expected financial and physical consequences of each action

Contingency plans

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Take the example of a company choosing forward vertical integration through the acquisition of a retailing chain as its growth strategy.

The resulting action plan to develop a new advertising program should include much of the following information:

Specific actions to be taken to make the program operational

Dates to begin and end each action

Person responsible for carrying out each action

Person responsible for monitoring the timeliness and effectiveness of each action

Expected financial and physical consequences of each action

Contingency

Importance of an Action Plan

Serves as a link between strategy formulation and evaluation and control

Specifies what needs to be done differently from current operations

Helps in both the appraisal of performance and in the identification of any remedial actions

Explicit assignment of responsibilities for implementing and monitoring the programs may contribute to better motivation

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Action plans are important for several reasons. First, action plans serve as a link between strategy formulation and evaluation and control. Second, the action plan specifies what needs to be done differently from the way operations are currently carried out. Third, during the evaluation and control process that comes later, an action plan helps in both the appraisal of performance and in the identification of any remedial actions, as needed. In addition, the explicit assignment of responsibilities for implementing and monitoring the programs may contribute to better motivation.

Example of an Action Plan

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Table 10–1 shows an example of an action plan for a new advertising and promotion program.

Management by Objectives

Management by Objectives (MBO)

encourages participative decision making through shared goal setting and performance assessment based on achieving stated objectives

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Management By Objectives (MBO) is a technique that encourages participative decision making through shared goal setting at all organizational levels and performance assessment based on the achievement of stated objectives.

Management by Objectives

The MBO process involves:

Establishing and communicating organizational objectives

Setting individual objectives

Developing an action plan to achieve objectives

Periodically (at least quarterly) reviewing performance

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The MBO process involves:

1. Establishing and communicating organizational objectives

2. Setting individual objectives (through superior–subordinate interaction) that help implement organizational ones

3. Developing an action plan of activities needed to achieve the objectives

4. Periodically (at least quarterly) reviewing performance as it relates to the objectives and including the results in the annual performance appraisal

Total Quality Management

Total Quality Management (TQM)

an operational philosophy committed to customer satisfaction and continuous improvement

committed to quality/excellence and to being the best in all functions

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Total Quality Management (TQM) is an operational philosophy committed to customer satisfaction and continuous improvement. TQM is committed to quality/excellence and to being the best in all functions.

Total Quality Management

TQM’s essential ingredients are:

Intense focus on customer satisfaction

Internal as well as external customers

Accurate measurement of every critical variable in a company’s operations

Continuous improvement of products and services

New work relationships based on trust and teamwork

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TQM’s essential ingredients are:

Intense focus on customer satisfaction

Internal as well as external customers

Accurate measurement of every critical variable in a company’s operations

Continuous improvement of products and services

New work relationships based on trust and teamwork

Dimensions of National Culture

Power distance (PD)

extent to which a society accepts an unequal distribution of power in organizations

Uncertainty avoidance (UA)

extent to which a society feels threatened by uncertain and ambiguous situations

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In measuring the differences among dimensions of national culture from country to country, Hofstede was able to explain why a certain management practice might be successful in one nation but fail in another. Power distance (PD) is the extent to which a society accepts an unequal distribution of power in organizations. Uncertainty avoidance (UA) is the extent to which a society feels threatened by uncertain and ambiguous situations.

Dimensions of National Culture

Individualism–collectivism (I–C)

extent to which a society values individual freedom and independence of action compared with a tight social framework and loyalty to the group

Masculinity–femininity (M–F)

extent to which society is oriented toward money and things (masculine) or toward people (feminine)

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Individualism–collectivism (I–C) is the extent to which a society values individual freedom and independence of action compared with a tight social framework and loyalty to the group.

Masculinity–femininity (M–F) is the extent to which society is oriented toward money and things (which Hofstede labels masculine) or toward people (which Hofstede labels feminine).

Dimensions of National Culture

Long-term orientation (LT)

extent to which society is oriented toward the long versus the short term

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Long-term orientation (LT) is the extent to which society is oriented toward the long versus the short term.

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