project report
boomshakaSWOT
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6 Key Elements of a Strategic Plan
11
Actions
Initiatives
Vision
Strategy
Mission
Objectives
What do we want to be?
(in relation to our strategy) .
How we will get there?
What we will achieve?
What we need to change in order to “get there”?
What steps will we take and who is accountable?
What, Where, How?
*
Types of Business Strategy
*
How is a firm competing with its rivals for customer’s business?
Cost Leadership
Differentiation
Focus Cost Leadership
Focus Differentiation
Integrated Cost / Differentiation
Broad Target
Narrow Target
Competitive Scope
Cost
Uniqueness
Competitive Advantage
*
Types of Business Strategy
- Achieving lower overall costs than rivals
- Performing activities differently (drive down
costs and focus on efficiency)
- Possessing the capability to differentiate the firm’s product or service and command a premium price
- Performing different (valuable) activities
- Meeting the unique needs of customers
*
- Broad Scope
- The firm competes in many customer segments
- General needs
- Narrow Scope
- The firm selects a segment or group of segments in the industry and tailors its strategy to serving them at the exclusion of others
- Specific needs
Types of Business Strategy
*
Strategic Intent
*
Miles and Snow Typology
Reactor
Little consideration of environment; drift with little concern for strategy
Prospector
Stress innovation and growth; seek new opportunities
Analyzer
Stress maintenance
of status quo with moderate innovation and growth
Defender
Stress stability, conservatism, and maintenance of status quo
Dynamic, growing
environment
characterized
by high uncertainty
and risk
Moderately stable
environment with
some uncertainty
and risk
Very stable
environment with
little uncertainty
and risk
*
*
Pre-Reading: Blue Ocean Strategy
- Red Ocean Strategy
- Compete in existing market space
- Beat the competition
- Exploit existing demand
- Make the value-cost trade-off
Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost
- Blue Ocean Strategy
- Create uncontested market space
- Make the competition irrelevant
- Create and capture new demand
- Break the value-cost trade-off
Align the whole system of a firm’s activities in pursuit of differentiation and low cost
Achieving Strategy Alignment
*
Value
Proposition
The utility buyers receive from an offering minus the price they pay for it
Profit
Proposition
The revenue an organization generates from an offering minus the cost to produce and deliver it
People
Proposition
The positive motivations and incentives put in place for people needed to support and implement the strategy
Structuralist Approach
The alignment of the three strategy propositions in pursuit of Either differentiation or low cost
Reconstructionist Approach
The alignment of the three strategy propositions in pursuit of Both differentiation and low cost
W.C. Kim and R. Mauborgne, HBR, 2009
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SWOT ANALYSIS
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External and Internal Analysis
By studying the external environment, firms identify:
What they MIGHT choose to do
By studying the internal environment, firms identify:
What they CAN do
Examine opportunities and threats by analyzing:
General Environment
Industry Environment
Competitive Environment
Examine strengths and weaknesses by understanding:
Resources,
Capabilities,
Core Competencies
*
The External Environment
*
Industry Environment
Competitor Environment
Demographic Environment
Political/Legal Environment
Technological Environment
Global Environment
Sociocultural Environment
Economic Environment
*
Porter’s Five Forces of Competition
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Threat of
New Entrants
Bargaining Power
of Buyers
Threat of
Substitute Products
Bargaining Power
of Suppliers
Rivalry among
competing firms
Organization
*
Five Forces of Competition
*
Threat of New Entrants (Barriers to entry): | Economies of Scale, Product Differentiation, Capital requirements, Switching Costs, Access to Distribution Channels, Cost Disadvantages independent of scale, Government Policy, Expected Retaliation |
Bargaining power of suppliers increases when: | Suppliers are large and few in number, Suitable substitute products are not available, Individual buyers are not large customers of suppliers and there are many of them, Suppliers’ goods are critical to buyers’ marketplace success, Suppliers products create high switching costs, Suppliers pose a threat to integrate forward into buyers’ industry |
Bargaining power of Buyers increases when: | Buyers are large and few in number, Buyers purchase a large portion of an industry’s total output, Buyers’ purchases are a significant portion of a supplier’s annual revenues, Buyers can switch to another products without incurring high switching costs, Industry’s products are undifferentiated or standardized, Buyers pose a threat to integrate backwards into sellers’ industry |
Threat of Substitute Products increases when: | Buyers face few switching costs, The substitute product’s price is lower, Substitute product’s quality and performance are equal to or greater than the existing product |
Intensity of Rivalry among competitors increases when: | There are numerous or equally balanced competitors, Industry growth slows or declines, There are high fixed costs or high storage costs, There is a lack of differentiation opportunities or low switching costs, When the strategic stakes are high, When high exist barriers prevent competitors from leaving the industry |
*
*
The value of the product to customers
The intensity of competition
Relative bargaining power at different levels within the value chain
3 key influences:
The Determinants of Industry Profitability
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5
Internal Analysis
Internally, firms need to understand their strengths and weaknesses. These generally stem from resources, capabilities, and core competencies.
Resources – tangible (e.g., financial, operational) as well as intangible assets (e.g., intellectual capital, reputation)
Capabilities – organizational processes that enable the attainment of task and functional outcomes. Often associated with functional areas.
Core Competencies – resources and capabilities that produce a firm’s sustainable competitive advantage.
*
Internal Analysis - Resources
- Firm assets
- Inputs into a firm’s production process
- Both tangible and intangible resources
Tangible resources are:
Resources
Core Competencies
Capabilities
Financial | Ability to raise capital and fund operations |
Organizational | Formal reporting structure, formal planning, controlling, and coordinating systems |
Physical | Sophistication and location of facilities and equipment |
Technological | Stock of technology such as patents, trademarks, copyrights, trade secrets |
*
Internal Analysis - Resources
*
- Firm assets
- Inputs into a firm’s production process
- Both tangible and intangible resources
Intangible resources are:
Resources
Core Competencies
Capabilities
Human | Knowledge, intellectual capital, trust, managerial capabilities, organizational routines |
Innovation | Ideas, scientific capabilities, capacity to innovate |
Reputational | Reputation with customers, brand name, perceptions about product quality, durability, and reliability, reputation with suppliers, etc. |
*
Internal Analysis - Capabilities
*
- Firm’s capacity to deploy resources
- Emerge over time through interactions
among tangible and intangible resources
- Often based on developing, carrying, and
exchanging information and knowledge
through human capital.
- Often developed in a specific functional areas
or as part of a functional area.
Resources
Core Competencies
Capabilities
*
Internal Analysis – Core Competencies
*
Resources
Core Competencies
Capabilities
Core Competencies must meet four criteria
to create a sustainable competitive advantage:
Valuable | Help a firm neutralize threats or exploit opportunities |
Rare | Are not possessed by many others |
Costly to Imitate | Historical – unique and valuable organizational culture or brand name Ambiguous – the cases and uses of a competence are unclear Social complexity – interpersonal relationships, trust, friendship among managers, suppliers, and customers |
Nonsubstitutable | No strategic equivalent |
*
The Resource-Based View of the Firm
- Core Competency: a resource or capability that sets an organization apart from its competitors and has potential to lead to a sustainable competitive advantage (SCA)
- able competitive advantage (SCA)?
- What makes a resource or capability a core competency (i.e., what causes it to be a source of SCA)?
Four criteria: VRIO
- Valuable
- Rare
- Not easily Imitated (or substituted)
- Organized to capture value (i.e. the firm is organized to capture value from the resource)
V R I O
- Value: Resources that help improve quality, innovation, efficiency, effectiveness, leverage opportunities in external environment, avoid threats in the external environment…
- Rareness: Resources not possessed by large numbers of competitors or potentially competing firms are sources of sustained competitive advantage.
Can apply to a single resource,
Can apply to a unique bundle of resources (i.e., physical capital, human capital, and organizational capital)
V R I O
- Imperfectly Imitable Resources: Valuable and rare resources can only be sources of sustained competitive advantage if firms that do not possess these resources cannot obtain them. Three means by which this happens:
(1) Unique Historical Conditions – a firm’s ability to acquire and exploit some resources may depend on their place in time and space, e.g., circumstances of firm’s founding or history, development of resource (or combination of resources over time), etc.
(2) Causal Ambiguity – when the link between the resources controlled by a firm and comp. advantage are not well understood. Lack of understanding leads to difficulty for duplication or imitation.
(3) Social Complexity – resources are embedded in complex social
relations, e.g., Interpersonal relations among managers, organizational culture, reputation among suppliers
V R I O
- Substitutability: There must be no strategically equivalent resource through which a competitor can achieve the same outcome
- Competitors may be able to imitate another firm’s advantage through substituting either:
Similar resources – e.g., developing an equivalently strong top management team or R&D group, etc.
Very different resources – using technological advances to achieve an equivalent ability provide customer service
V R I O
- Organized to Capture Value: For a resource to lead to a competitive advantage, an organization’s structure, coordinating systems, and strategic priorities must be aligned to capture the value a resource offers.
Company Examples of Core Competencies & Applications
4-*
*
Internal Analysis – Core Competencies
Is it valuable? | Is it Rare? | Is it costly to imitate? | Is it Non-substitutable | Competitive Consequences | Performance Implications |
NO | NO | NO | NO | Comp Disadvantage | Below-average Returns |
YES | NO | NO | YES/NO | Comp. Parity | Average Returns |
YES | YES | NO | YES/NO | Temporary Comp. Advantage | Average to above average Returns |
YES | YES | YES | YES | Sustainable Comp. Advantage | Above Average Returns |
*
What is an “A” position?
- Position that generates a firm’s core competencies;
- A critical position within a firm’s strategic capability;
- A position that has a direct impact on the firm’s strategy success (impacts the firm’s success with customers) and creates wealth for the firm;
- Mistakes and opportunity costs can be very expensive;
- Usually a position where the external labor market is in short supply;
- Poor performance is immediately detected;
- A position that requires professional expertise, as well as extensive knowledge of the firm;
- Can exist at any level throughout the business
- What are your company’s A positions?
What, historically, have been Apple’s competitive advantages?
- Ease of use (user-friendly graphical interface; plug-and-play peripherals)
- Proprietary environments (especially with its operating system)
- Industrial design (clever, innovative, appealing design and packaging)
- Strong brand / Customer loyalty
- Ecosystem of complements (apps, music, videos, etc.)
- Economies of scale (e.g., one of the largest purchasers of flash memory in the world)
- Economies of scope (e.g., the ability to cross-sell iPhones. iPads, and Macs) through Apple stores
*
How sustainable is Apple’s competitive position in smartphones?
Positives:
- Expanding ecosystem
- Buyer loyalty
- Competitive prices on older models
Challenges:
- Declining differentiation
- Increased competition
- Rapidly falling prices
- Fashion fad?
*
Discussion Question
Why did Apple struggle historically in PCs?
*
Broader Lessons from Apple
- Big difference between having a product advantage and having a competitive advantage. Product advantages are difficult to sustain.
- Companies must have a deep understanding of the driving forces within their industries
- Timing is everything
- Innovation is key to creating sustainable competitive advantage
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Mapping Human Capital and A Positions
*
Managing Human Capital Effectively requires Internal and External Alignment
Work Environment
Competency
Management
Behavior
Management
External Environment
Globalization, Gov’t, Responding to the Market
Internal Environment: Strategy, Culture, etc.
Competitive
Advantage
Employee
Outcomes
*
Bill Castellano, Ph.D., Rutgers University
*
Internal Alignment
*
Work Environment
Attitudes and Behaviors
Employee Competencies
Job Design
Organizational Structure
Participation / Empowerment
Recruitment, Selection, Training & Development
Incentives and Rewards
Performance evaluation and Appraisal
Compensation
An HR system is directly concerned with how all the practices fit together – their alignment…
*
What’s Happening in Firms Today?
Industry Changes
- Globalization
- Information technology
Need for…
- Organizational agility
- Speed
- Innovation
- Cost
- Knowledge-based strategies
- Core competencies
- Strategic capability
- External partnerships
Leading to…
New Business Equation
*
Bill Castellano, Ph.D., Rutgers University
Focus on:
Core
Competencies
Network
Structures
Intellectual
Capital
Partners &
Contractors
What are your company’s core competencies?
What do your customers value? How do you create that value?
What sets your company apart from your current and potential rivals in delivering that value?
What is your company’s strategy? How do you translate your core competencies into company success?
*
Bill Castellano, Ph.D., Rutgers University
Focus on:
Core
Competencies
Network
Structures
Intellectual
Capital
Partners &
Contractors
Managing Human Capital
- What are the key skill areas that support your company’s core competence?
- Contribution to customer value
- Firm-specific or unique (market)
- Do you know which employees contribute toward your core competence?
- What are your other employees doing to help realize a competitive advantage?
*
Bill Castellano, Ph.D., Rutgers University
Focus on:
Core
Competencies
Network
Structures
Intellectual
Capital
Partners &
Contractors
B
C
D
A
Low STATEGIC VALUE high
Low UNIQUE high
Mapping Human Capital
*
*
Mapping Human Capital
Related to how valuable or unique the work is, based on:
Strategic Value:
- Degree the work directly contributes to important work group or organizational goals
- Degree to which the work contributes to a firm’s competitive advantage or core competencies
Uniqueness:
- Degree to which it is rare and not readily available in the labor market
- Degree to which it is specialized or is idiosyncratic to a particular firm
*
EXERCISE – Map out your workforce
Business Strategy | _______________________________________________________ | ||
Employee Group | How do they add value? (operational excellence, innovation, customer relations, etc.) | How much value added? | How much uniqueness? |
Manufacturing | 1 2 3 4 5 6 7 8 9 10 | 1 2 3 4 5 6 7 8 9 10 | |
R&D | 1 2 3 4 5 6 7 8 9 10 | 1 2 3 4 5 6 7 8 9 10 | |
IT | 1 2 3 4 5 6 7 8 9 10 | 1 2 3 4 5 6 7 8 9 10 | |
Supply Chain | 1 2 3 4 5 6 7 8 9 10 | 1 2 3 4 5 6 7 8 9 10 | |
Legal | 1 2 3 4 5 6 7 8 9 10 | 1 2 3 4 5 6 7 8 9 10 | |
Marketing | 1 2 3 4 5 6 7 8 9 10 | 1 2 3 4 5 6 7 8 9 10 | |
HR | 1 2 3 4 5 6 7 8 9 10 | 1 2 3 4 5 6 7 8 9 10 | |
Customer Service | 1 2 3 4 5 6 7 8 9 10 | 1 2 3 4 5 6 7 8 9 10 | |
Sales | 1 2 3 4 5 6 7 8 9 10 | 1 2 3 4 5 6 7 8 9 10 | |
Finance | 1 2 3 4 5 6 7 8 9 10 | 1 2 3 4 5 6 7 8 9 10 | |
Logistics | 1 2 3 4 5 6 7 8 9 10 | 1 2 3 4 5 6 7 8 9 10 | |
Engineering | 1 2 3 4 5 6 7 8 9 10 | 1 2 3 4 5 6 7 8 9 10 | |
Other: ________ | 1 2 3 4 5 6 7 8 9 10 | 1 2 3 4 5 6 7 8 9 10 | |
Other: ________ | 1 2 3 4 5 6 7 8 9 10 | 1 2 3 4 5 6 7 8 9 10 |
What is an “A” position?
- Position that generates a firm’s core competencies;
- A critical position within a firm’s strategic capability;
- A position that has a direct impact on the firm’s strategy success (impacts the firm’s success with customers) and creates wealth for the firm;
- Mistakes and opportunity costs can be very expensive;
- Usually a position where the external labor market is in short supply;
- Poor performance is immediately detected;
- A position that requires professional expertise, as well as extensive knowledge of the firm;
- Can exist at any level throughout the business
Wealth Creation
Strategic Value
High
-$
$$$
0
“C”
Positions
“B” Positions
“A” Positions
Low
Median
Median
Median
Its Not Just the Mean….
But Also the Variance!
Company Examples of Core Competencies & Applications
4-*
*
*
B
C
D
A
R&D
Sales
HR
Diagnostics
Low VALUE high
Low UNIQUE high
Mapping Skill Areas at BIOTECH
TMT
Core
*
Bill Castellano, Ph.D., Rutgers University
*
B
C
D
A
R&D
Sales
HR
Diagnostics
Customer
Service
Low VALUE high
Low UNIQUE high
Mapping Skill Areas at BIOTECH
MIS
Laboratory
Services
Fin
Quality
TMT
Core
Compulsory
*
Bill Castellano, Ph.D., Rutgers University
*
B
C
D
A
R&D
Sales
HR
Diagnostics
Customer
Service
Low VALUE high
Low UNIQUE high
Mapping Skill Areas at BIOTECH
MIS
Laboratory
Services
Fin
Quality
TMT
Core
Compulsory
*
Bill Castellano, Ph.D., Rutgers University
Manufacturing
Operations
Distribution
Ancillary
*
B
C
D
A
R&D
Sales
HR
Diagnostics
Customer
Service
Low VALUE high
Low UNIQUE high
Mapping Skill Areas at BIOTECH
MIS
Laboratory
Services
Fin
Quality
TMT
Core
Compulsory
*
Bill Castellano, Ph.D., Rutgers University
Manufacturing
Operations
Distribution
Legal Counsel
Ancillary
Idiosyncratic
*
An Architectural Perspective
- If people contribute in different ways to the strategic advantage of a firm, then…
…do employment modes differ?
…do employment relationships differ?
…do HR practices differ?
- An architectural approach stands in opposition to a universalistic “best practices” approach.
*
Bill Castellano, Ph.D., Rutgers University
R&D
Manufacturing/
Operations
Distribution
Sales
Sales
TMT
Cust
Serv
HR
R&D
Rapids
Fin
Customer
Service
Mfg
R&D
R&D
Partners
Low VALUE high
Low UNIQUE high
Rapids
HR
Legal
MIS
Biologicals
Fin
Quality
TMT
Core
Compulsory
Idiosyncratic
Ancillary
R&D
Partners
R&D
Partners
R&D
Partners
R&D
Partners
Lepak and Snell (1999, 2002, 2002). Different skill groups have different employment arrangements and different HR configurations. The integration of these different skill groups remains an issue for research. The focus is on relationship development, knowledge creation, transfer, and integration. HR practices are the principle levers we are looking at in this study.
An Architectural Perspective
External
Employment
Internal
Employment
Low Strategic Value
High Strategic Value
Strategic value of employee skills: Makes a significant contribution to customer value through increased:
- efficiency
- creativity and innovation
- quality
- customer responsiveness
- etc.
*
Bill Castellano, Ph.D., Rutgers University
An Architectural Perspective
Relational
Employment
Relationship
Transactional
Employment
Relationship
High Uniqueness
Low Uniqueness
Uniqueness of employee skills: Difficult for competitors to imitate and are competitively unique due to:
Firm specific application of abilities
Not readily available in the marketplace
*
Bill Castellano, Ph.D., Rutgers University
low Strategic Value high
Relational
Transactional
Internalization
Externalization
Knowledge Work
- HR: Commitment-based
- staff based on potential
- develop (firm-specific)
- extensive pay & benefits
- autonomy/self-direction
Strategic Partnerships
- HR: Collaborative-based
- select on past experience
- develop the relationship
- evolving scope
- rewards for ideas
Traditional Jobs
- HR: Productivity-based
- staff based on current skill
- less development
- market wage
- focus on ST performance
Contract Work
- HR: Compliance-based
- standardize/simple (outsource)
- focus on rules & procedures
- narrow scope
- error avoiding
- hourly pay
The Human Resource Architecture
low Uniqueness high
*
Bill Castellano, Ph.D., Rutgers University
*
R&D
Manufacturing/
Operations
Distribution
Sales
Sales
TMT
Cust
Serv
HR
R&D
Rapids
Fin
Customer
Service
Mfg
R&D
R&D
Partners
Low VALUE high
Low UNIQUE high
Rapids
HR
Legal
MIS
Biologicals
Fin
Quality
TMT
Core
Compulsory
Idiosyncratic
Ancillary
R&D
Partners
R&D
Partners
R&D
Partners
R&D
Partners
Lepak and Snell (1999, 2002, 2002). Different skill groups have different employment arrangements and different HR configurations. The integration of these different skill groups remains an issue for research. The focus is on relationship development, knowledge creation, transfer, and integration. HR practices are the principle levers we are looking at in this study.
HR and strategic implementation
Competitive Advantage
Each Employee Group has (or needs) a unique HR system…
Employee
Group A
Employee
Group C
Employee
Group B
Using the right HR system for each employee group maximizes their potential contribution to competitive advantage
Rewards
Appraisal
Development
Staffing
Job Design
- enriched & empowered
- customized
- sophisticated recruiting and selection
- aptitude (or able to learn)
- promote from within
- high-investment, continuous
- firm-specific
- focus on strategic contribution
- developmental
- external equity (high wages)
- pay for knowledge, experience,
high variance incentive pay based on
strategic objectives
- equity ownership and perks
COMMITMENT-BASED HRM SYSTEM
Core Human Capital
Employment Mode: knowledge work
Employment Relationship: organization-focused
*
B
C
D
A
R&D
Sales
TMT
HR
Diagnostics
Fin
Mfg
R&D
Low VALUE high
Low UNIQUE high
Mapping Skill Areas at BIOTECH
MIS
TMT
Core
Rewards
Appraisal
Development
Staffing
Job Design
- clearly defined
- moderately empowered
- external recruitment
- achievement
- limited to firm-specific
- short-term focus
- developmental
- focus on performance
- external equity (market rate)
- pay for performance
PRODUCTIVITY-BASED HRM SYSTEM
Employment Mode: traditional job
Employment Relationship: job focused
Compulsory Human Capital
*
Bill Castellano, Ph.D., Rutgers University
B
C
D
A
R&D
Sales
Sales
TMT
HR
R&D
Diagnostics
Fin
Customer
Service
Mfg
R&D
Low VALUE high
Low UNIQUE high
Mapping Skill Areas at BIOTECH
MIS
Laboratory
Services
Fin
Quality
TMT
Core
Compulsory
Rewards
Appraisal
Development
Staffing
Job Design
- well-defined
- limited scope
- outsourced (perhaps)
- contract for a specific task
- limited to rules & procedures
- administrative
- hourly or contract-contingent
COMPLIANCE-BASED HRM SYSTEM
Employment Mode: contract work
Employment Relationship: transactional
Ancillary Human Capital
*
Bill Castellano, Ph.D., Rutgers University
B
C
D
A
R&D
Manufacturing
Operations
Distribution
Sales
Sales
TMT
HR
R&D
Diagnostics
Fin
Customer
Service
Mfg
R&D
Low VALUE high
Low UNIQUE high
Mapping Skill Areas at BIOTECH
MIS
Laboratory
Services
Fin
Quality
TMT
Core
Compulsory
Ancillary
Customer
Service
Rewards
Appraisal
Development
Staffing
Job Design
- team-based
- enriched & autonomous
- ability to collaborate
- achievement
- continuous on-the-job
- firm-specific
- team-oriented
- goal accomplishment
- group-based incentives
- contract, salary, pay-for-
knowledge
COLLABORATIVE HRM SYSTEM
Employment Mode: partnership
Employment Relationship: collaborative
Idiosyncratic Human Capital
*
Bill Castellano, Ph.D., Rutgers University
B
C
D
A
R&D
Manufacturing
Operations
Distribution
Sales
Sales
TMT
HR
R&D
Diagnostics
Fin
Customer
Service
Mfg
R&D
R&D
Partners
Low VALUE high
Low UNIQUE high
Mapping Skill Areas at BIOTECH
HR
Legal
MIS
Laboratory
Services
Fin
Quality
TMT
Core
Compulsory
Idiosyncratic
Ancillary
Customer
Service
Diagnostics
R&D
Partners
R&D
Partners
R&D
Partners
R&D
Partners
Discussion
Strategic human resource
Management
Best practice? - Does one size
fit all?
A new mind-set - managing skills and
contributions versus managing jobs
An architectural perspective
- Balancing and leveraging employment options.
- Which combinations are best?
*
Bill Castellano, Ph.D., Rutgers University
B
C
D
A
R&D
Manufacturing
Operations
Distribution
Sales
Sales
TMT
HR
R&D
Diagnostics
Fin
Customer
Service
Mfg
R&D
R&D
Partners
Low VALUE high
Low UNIQUE high
Mapping Skill Areas at BIOTECH
HR
Legal
MIS
Laboratory
Services
Fin
Quality
TMT
Core
Compulsory
Idiosyncratic
Ancillary
Customer
Service
Diagnostics
R&D
Partners
R&D
Partners
R&D
Partners
R&D
Partners
Discussion
Core Competence &
Competitive Advantage
Strategic value - How do we
create value for customers?
Uniqueness - What is our
source of differentiation?
Extendibility – how do we leverage skills to create future value?
Firm Performance - Efficiency and effectiveness
*
Bill Castellano, Ph.D., Rutgers University
*
B
C
D
A
R&D
Manufacturing
Operations
Distribution
Sales
Sales
TMT
HR
R&D
Diagnostics
Fin
Customer
Service
Mfg
R&D
R&D
Partners
Low VALUE high
Low UNIQUE high
Mapping Skill Areas at BIOTECH
HR
Legal
MIS
Laboratory
Services
Fin
Quality
TMT
Core
Compulsory
Idiosyncratic
Ancillary
Customer
Service
Diagnostics
R&D
Partners
R&D
Partners
R&D
Partners
R&D
Partners
*
II. HR Objectives
Designing an HR System: Objectives
Managing Competencies
- Objectives: What competencies are needed in “A positions” for sustainable competitive advantage? Indicate the specific SKAs you need. Indicate whether you plan to –Buy, Make/Develop, Acquire, Divest – Indicate Where? Why?
Managing Behaviors
- Objectives: What specific behaviors and mindset do you need these employees to demonstrate? Why?
Managing Work Environment
- Objectives: What are your goals for job and organizational design - to promote efficiencies, innovation, risk management, solutions, teamwork, etc. Why?
*
Designing an HR System: Objectives
Organizational Culture
- Objectives: What type of culture aligns with your corporate strategy? What behaviors and mindset should be developed? Why?
Leadership
- Objectives: What type of leadership style and characteristics are best to lead this company? Why?
*
*
Strategic Choice and People “Fit”
Operational Excellence
— Cost —
Product Leadership
— Innovation—
Customer Intimacy
—Solutions —
Core Workforce Mindset
• Identifies with process
• Trainable/can learn
• Follow the Battle Plan
• Dedicated to organization
• Shorter-term focus
• Avoid waste and cost
• Driven by incremental improvement
• High concern for output quantity
• High concern for process
• High comfort with stability
• Lower level of risk-taking
• Identifies with, values and is humbled by the discovery process
• Challenges the possible/the status quo
• Anti-bureaucratic
• Longer-term focus
• Versatile
• Driven by learning
• Higher concern for outcomes
• High tolerance for ambiguity
• Greater degree of risk-taking
• Identifies with customers
• Shares “secrets” readily, easily
• Seeks customer intelligence
• Adaptable/flexible
• Makes customer results happen
• Quick study
• Driven by customer success
• Anticipates customer needs
• Not: Free spirits/ostentatious
• NOT: Structured/streamlined
• NOT: Clones
Typical Behaviors
• Teamwork
• Working to fit in/find a role
• Relatively repetitive and predictable behaviors
• Primarily individual activity as part of process
• Problem solving
· Challenging one another
• Cross-functional collaboration
• High degree of creative behavior
• Share ideas and solutions
• Thinks/works across boundaries
• Develops broad-based skills
• Networks effectively
• Customer management
Examples
Federal Express, Dell, Nucor, Wal-Mart, UPS
Sony, Glaxo, Merck, 3M, Intel, Nike, Microsoft
Four Seasons, Airborne, Roadway, Home Depot, Cott, Cable & Wireless
Managing Competencies Objectives
- Objectives: What competencies are needed in “A positions” for sustainable competitive advantage? Indicate the specific SKAs you need. Indicate whether you plan to –Buy, Make/Develop, Acquire, Divest – Indicate Where? Why?
Examples:
- We need top R&D scientists specializing in cancer research. Need PhD and experience in both academic and commercial research. Need both theoretical and practical knowledge. Proven track record of innovation and groundbreaking research is a must. Given the limited availability of individuals with these unique competencies, will target noted universities and key competitors. Will consider targeting specialized R&D companies for potential acquisition. Focus will be globally.
*
Managing Behaviors
- Objectives: What specific behaviors and mindset do you need these employees to demonstrate? Why?
Given the importance of collaboration and the interdisciplinary nature of this work, employees need to demonstrate the following behaviors:
- Highly collaborative.
- Willing to exchange knowledge with team members
- Very precise and have a keen attention to detail
- Able to focus on quality control
- Comfortable working long hours
*
Managing Work Environment
- Objectives: What are your goals for job and organizational design - to promote efficiencies, innovation, risk management, solutions, teamwork, etc. Why?
Given the need to promote innovation and collaboration:
- Our R&D scientists must have freedom to determine how their work is to be done.
- Need to work in a team-based environment
- Operate in a cross-functional structure
*
*
III. HR Practices
*
low Strategic Value high
Relational
Transactional
Internalization
Externalization
Knowledge Work
- HR: Commitment-based
- staff based on potential
- develop (firm-specific)
- extensive pay & benefits
- autonomy/self-direction
Strategic Partnerships
- HR: Collaborative-based
- select on past experience
- develop the relationship
- evolving scope
- rewards for ideas
Traditional Jobs
- HR: Productivity-based
- staff based on current skill
- less development
- market wage
- focus on ST performance
Contract Work
- HR: Compliance-based
- standardize/simple (outsource)
- focus on rules & procedures
- narrow scope
- error avoiding
- hourly pay
The Human Resource Architecture
low Uniqueness high
*
Bill Castellano, Ph.D., Rutgers University
*
R&D
Manufacturing/
Operations
Distribution
Sales
Sales
TMT
Cust
Serv
HR
R&D
Rapids
Fin
Customer
Service
Mfg
R&D
R&D
Partners
Low VALUE high
Low UNIQUE high
Rapids
HR
Legal
MIS
Biologicals
Fin
Quality
TMT
Core
Compulsory
Idiosyncratic
Ancillary
R&D
Partners
R&D
Partners
R&D
Partners
R&D
Partners
Lepak and Snell (1999, 2002, 2002). Different skill groups have different employment arrangements and different HR configurations. The integration of these different skill groups remains an issue for research. The focus is on relationship development, knowledge creation, transfer, and integration. HR practices are the principle levers we are looking at in this study.
Rewards
Appraisal
Development
Staffing
Job Design
- enriched & empowered
- customized
- sophisticated recruiting and selection
- aptitude (or able to learn)
- promote from within
- high-investment, continuous
- firm-specific
- focus on strategic contribution
- developmental
- external equity (high wages)
- pay for knowledge, experience,
high variance incentive pay based on
strategic objectives
- equity ownership and perks
COMMITMENT-BASED HRM SYSTEM
Core Human Capital
Employment Mode: knowledge work
Employment Relationship: organization-focused
*
B
C
D
A
R&D
Sales
TMT
HR
Diagnostics
Fin
Mfg
R&D
Low VALUE high
Low UNIQUE high
Mapping Skill Areas at BIOTECH
MIS
TMT
Core
Strategic choices and HR alignment | ||||||
Work Design | Selection | Training / Development | Rewards | Performance Management | Communication | |
Processes Job design Org Design | Hire, Move, Exit | Orientation, Current job, future job, career management | Attitudes, behaviors, consequences, reward levels | Culture, Expectations, Evaluation, Feedback, | Strategy, mindsets, status | |
Operational Excellence | ||||||
Product Leadership | ||||||
Customer Intimacy |
Strategic choices and HR alignment | ||||||
Work/Org. Design | Recruiting/ Selection | Training / Development | Compensation | Performance Management | Communication | |
Processes Job design Org Design | Hire, Move, Exit | Orientation, Current job, future job, career management | Attitudes, behaviors, consequences, reward levels | Culture, Expectations, Evaluation, Feedback, | Strategy, mindsets, status | |
Operational Excellence | Standardized/ Strict Policies and Procedure oriented Centralized / Controlled | Basic Education – (quant, verbal, written, oral) Process Skills Passive learners | Focus on compliance with rules, regulations Predictable career ladder | Team productivity awards Gain sharing tied to Cost savings Performance-based pay | Process Total Costs, Errors, Abandoned Calls, Net sales/head count, speed / deadlines met | Encourage process improvements Productivity improvement feedback |
Product Leadership | Complex / Increased autonomy High discretion/decision making Cross functional | Technical , Outside the box creative thinkers, Applied Competencies Active Learners | Highly interactive Employee involvement in learning Mandatory skill development | Team incentives % sales from new products, Margins, New Sales Growth, Competency based pay | Collaboration New Ideas Innovation awards/Industry accolades, Copyrights Patents | Anti-bureaucratic, Feedback on products/services |
Customer Intimacy | Quality control Teams Flexible / Coordinated | Resourcefulness, active learners, Adaptability | Helpfulness Relationships Management Customer Support | Customer satisfaction/ retention Market share | Responsiveness Knowledge sharing Customer Retention New Customers / referrals | Processes for success Line of sight. |
Designing an HR System: Practices
Managing Competencies
What competencies are needed? How to acquire?
Recruit- what sources (top universities, search firms, etc.), employee referrals, how, who is involved
Select – based on what criteria, what methods, who is involved
Succession Management Program – how to identify talent, how to assess and select, what criteria, what kind of developmental programs
T&D – competency model, what methods, who is involved
Acquire – what external competencies may be needed either now or in the future - M&A, strategic partnership, where, how to integrate. Will there be a need to restructure – eliminate obsolete functions, redeploy, why
Describe specifically how you will design these practices – Why? How? What criteria?, What methods?, Who will be involved?, How to process?
*
Designing an HR System: Practices
Managing Behaviors
What behaviors do you want to reinforce? How will you motivate employees?
PM System - Describe your measurable goals and targets: must have variance, how to measure / evaluate, what methods, how to provide feedback etc. Why?
Compensation - How will you incentivize these behaviors? Describe the specific components of compensation: base pay, incentive based on what, how to structure: must have variance, ST: cash bonus, profit sharing; versus LT pay: stock options/equity; what type of benefits. Why?
*
Designing an HR System: Practices
Managing Work Environment
- Job Design – how will these jobs be designed? Degree of standardization/complexity, autonomy, decision making authority, degree of interdependencies – Why?
- Organizational Structure – what will be the structure of the organization of these positions? Reporting relationships, hierarchical, flat, cross-functional, networked? Based on what – product, region, function, etc. What?
*
Designing an HR System: Practices
Organizational Culture
- Practices: How/Which HR practices support this culture? Why?
Leadership
- Practices: How will you find and/or develop leaders. What specific practices? Why?
*
IV. Organizational Culture and Leadership
*
What Is Organizational Culture?
Characteristics:
- Innovation and risk taking
- Attention to detail
- Outcome orientation
- People orientation
- Team orientation
- Aggressiveness
- Stability
Organizational Culture
A common perception held by the organization’s members; a system of shared meaning.
*
Organizational Culture
*
- Assumptions, values and beliefs of a company that affect how employees behave
- Informal or unwritten
- Observed in how employees talk to one another
- Seen in employees’ interaction with customers
- Bureaucratic cultures value rules, formalization, hierarchy
- Entrepreneurial cultures value creativity, knowledge exchange, innovation
- Other cultures value competition, teamwork, cooperation, fun
What Do Cultures Do?
Culture’s Functions:
- Defines the boundary between one organization and others.
- Conveys a sense of identity for its members.
- Facilitates the generation of commitment to something larger than self-interest.
- Enhances the stability of the social system.
- Serves as a sense-making and control mechanism for fitting employees in the organization.
*
What Do Cultures Do?
Culture as a Liability:
- Barrier to change
- Barrier to diversity
- Barrier to acquisitions and mergers
*
How Culture Begins
- Founders hire and keep only employees who think and feel the same way they do.
- Founders indoctrinate and socialize these employees to their way of thinking and feeling.
- The founders’ own behavior acts as a role model that encourages employees to identify with them and thereby internalize their beliefs, values, and assumptions.
*
Creating Culture
*
- Values
- What you stand for
- What you communicate
- Behaviors
- How leaders and managers act
- How decisions are made
- How employees are treated
*
How Organization Cultures Form
*
50.bin
Shaping Organizational Culture – HR Practices
- Who you hire – your selection criteria
- What competencies are developed
- What behaviors do you motivate
- What you measure – how are employees are evaluated
What is rewarded: individual bonuses versus team bonus, etc.
- How are jobs/organization designed – how much autonomy and involvement, team versus individual tasks
How decision's are made – top down, bottom up
Formal versus informal dress/work environment
- How do you select and develop leaders – what leadership characteristics
ASA Model – Attraction – Selection - Attrition
*
How Organizational Cultures Form
ASA Model
Similar people are Attracted to the organization
Hiring managers Select people
who look and act like other employees
The Attrition rate for people
who don’t fit in is high.
Keeping Culture Alive
- Selection
- Concern with how well the candidates will fit into the organization.
- Provides information to candidates about the organization.
- Top Management
- Senior executives help establish behavioral norms that are adopted by the organization.
- Socialization
- The process that helps new employees adapt to the organization’s culture.
*
*
LOOSE
TIGHT
INTERNAL
EXTERNAL
5
4
3
2
1
1
2
3
4
5
5
4
3
2
2
3
4
5
PL
OE
CI
What is the cultural focus of your organization?
*
Types of Organizational Cultures
Adaptability Culture
- Characterized by values that support the organization’s ability to interpret and translate signals from the environment into new behavior responses
- Employees make decisions and act freely to meet needs
- Responsiveness to customers is highly valued
- Leaders create change by encouraging creativity, experimentation, and risk taking
*
Achievement Culture
- Characterized by a clear vision of the organization’s goals and leaders’ focus on the achievement of specific targets
- Results-oriented culture that values:
- Competitiveness to get it right
- Diligence ensuring quality
- Personal initiative to meet customer needs
- Willingness to work long and hard
*
Involvement Culture
- Has an internal focus on the involvement and participation of employees
- Places value on meeting the needs of organization members
- Leaders:
- Emphasize cooperation, consideration, and fairness
- Avoid status differences
*
Consistency Culture
- Has an internal focus and consistency orientation for a stable environment
- Supports a methodical, rational, orderly way of doing business
- Following the rules and being thrifty are valued
- Focus on efficiency
*
Workforce Mindset
*
The Hearts and Minds of the Workforce
Wal-Mart
Intel
Pfizer/Merck
Accenture
Fast
Inexpensive
Convenient
Best
Fastest
Easiest
“Sure cure”
Safe/Reliable
Worth the price
Problem solver
Customizer
Leverage competitive advantage
Operational Excellence
Product Leadership
Customer Intimacy
*
Strategic Choice and People “Fit”
Operational Excellence
— Cost —
Product Leadership
— Innovation—
Customer Intimacy
—Solutions —
Core Workforce Mindset
• Identifies with process
• Trainable/can learn
• Follow the Battle Plan
• Dedicated to organization
• Shorter-term focus
• Avoid waste and cost
• Driven by incremental improvement
• High concern for output quantity
• High concern for process
• High comfort with stability
• Lower level of risk-taking
• Identifies with, values and is humbled by the discovery process
• Challenges the possible/the status quo
• Anti-bureaucratic
• Longer-term focus
• Versatile
• Driven by learning
• Higher concern for outcomes
• High tolerance for ambiguity
• Greater degree of risk-taking
• Identifies with customers
• Shares “secrets” readily, easily
• Seeks customer intelligence
• Adaptable/flexible
• Makes customer results happen
• Quick study
• Driven by customer success
• Anticipates customer needs
• Not: Free spirits/ostentatious
• NOT: Structured/streamlined
• NOT: Clones
Typical Behaviors
• Teamwork
• Working to fit in/find a role
• Relatively repetitive and predictable behaviors
• Primarily individual activity as part of process
• Problem solving
· Challenging one another
• Cross-functional collaboration
• High degree of creative behavior
• Share ideas and solutions
• Thinks/works across boundaries
• Develops broad-based skills
• Networks effectively
• Customer management
Examples
Federal Express, Dell, Nucor, Wal-Mart, UPS
Sony, Glaxo, Merck, 3M, Intel, Nike, Microsoft
Four Seasons, Airborne, Roadway, Home Depot, Cott, Cable & Wireless
Strong versus Weak Culture
Symbolizes a complete agreement or shared mind-set on key values and norms, with leaders playing a key role.
Symbolizes a lack of agreement or shared mind-set on key values and norms.
*
Weak cultures are generally associated with low performance.
There is a low degree of fit between strategy and an organization’s culture.
Characteristics of Weak (Low) Performing Cultures
Characteristics of Strong (High) Performing Cultures
*
Strong cultures are generally associated with high performance.
There is a higher degree of fit between strategy and an organization’s culture.
The Leader’s Role in Influencing Culture
Leaders use different tools for changing, modifying, or sustaining culture.
- Substantive actions are explicit and highly visible and indicative of management’s commitment to a new way of doing things.
- Instituting new policies and practices
- Aligning strategy and structure to culture
- Matching rewards/incentives to the culture
- Matching work environment design to culture
- Symbolic actions are valuable for the signals they send about the kinds of behavior and expectations leaders wish to encourage.
- Modeling expected behavior
- Recognizing and celebrating organizational accomplishments
- Being visible
Dimensions of Social Styles
ASSERTIVENESS
The way in which a person is perceived as attempting to influence the thoughts and actions of others
RESPONSIVENESS
The way in which a person is perceived as focusing on the task or feelings when relating to others
VERSATILITY
Adapting one’s behavior to meet the concerns and expectations of others
*
*
ASK-DIRECTED
ASSERTIVENESS
- Deliberate
- Seldom interrupts
- Seldom emphatic
- Tends to lean back
TELL-DIRECTED
ASSERTIVENESS
- Quick
- Declarative statements
- Often interrupts
- Often emphatic
- Tends to lean forward
TASK-DIRECTED
RESPONSIVENESS
- Talks about tasks, facts
- Minimal body gestures
- Tends not to expose personal feelings
- Limited facial expressions
PEOPLE-DIRECTED
RESPONSIVENESS
- Talks about relationships
- Many, varied gestures
- Easily exposes personal feelings
- Varied facial expressions
Ask-Directed
Assertiveness
Task-Directed
Responsiveness
People-Directed
Responsiveness
Tell-Directed
Assertiveness
Driver
- Take charge
- Make quick decisions
- Like challenges
- Focus on results
Analytical
- Focus on facts and logic
- Act when payoff is clear
- Careful not to commit
too quickly
Amiable
- Coach and counsel
- Provide support
- Communicate trust
and confidence
Expressive
- Create excitement and
involvement
- Share ideas and dreams
- Very enthusiastic
*
*
Task-Directed
Responsiveness
Tell-Directed
Assertiveness
Ask-Directed
Assertiveness
People-Directed
Responsiveness
Relating to Drivers:
- Place business before relationships
- Make efficient use of their time
- Provide accurate and useful information
- Offer options in a way that allows them
to feel they’re making the decision
- Provide them with the odds for success
Relating to Expressives:
- Develop an open and friendly relationship
- Be tolerant of their causal use of time
- Let them know you can help them succeed
- Provide them with recognition (even applause)
of their visions and actions
- Assure them of the quality of the work
being done
Relating to Amiables:
- Have an open an honest approach
- Spend time to develop a meaningful
relationship
- Provide assurance of being congenial
and trustworthy
- Give them personal support
- Provide them with guarantees and
assurances
Relating to Analyticals:
- Adopt a predictable and objective
approach
- Be well prepared and organized
- Provide confirmation of expertise
- Provide factual, detailed information
- Provide solid evidence to help them
make good decisions
Back-up Behaviors When Threatened
*
Analytical – AVOIDING
- Avoids confrontation.
- Retreats to other distractions
- Delays decisions
- Controls emotions
Driver – AUTOCRATIC
- Confronts others
- Focuses on results
- Becomes demanding
Amiable – ACQUIESCING
- Yields to others’ viewpoints
- Soothes relationships
- Feels hurt or slighted
Expressive – ATTACKING
- Confronts others
- Verbalizes judgmental feelings
- Shows extreme emotion
Disc Profile
*
Analytical
Driver
Expressive
Amiable
*
Ask-Directed
Assertiveness
Task-Directed
Responsiveness
People-Directed
Responsiveness
Tell-Directed
Assertiveness
Driver
- Direct Leadership Style
Analytical
- Systematic Leadership Style
Amiable
- Considerate Leadership Style
Expressive
- Spirited Leadership Style
*
Leadership Styles
*
The Four Leadership Styles
Direct - Leads by taking charge
Spirited - Leads by inspiring
Considerate - Leads by building group harmony
Systematic - Leads by planning carefully
*
*
Direct Leaders - Strengths
- Likes to compete
- Produce quick results
- Get down to business
- Focus on deadlines
- Take charge no matter how challenging
- Energetic- Move people
*
Direct Leaders
Most Effective
In crisis situations or rapidly changing situations in which bold action and quick decisions are needed.
Less Effective
Situations requiring careful planning and situations requiring tact and sensitivity to other’s feelings.
*
Spirited Leaders - Strengths
- Visualize the big picture
- Create a fun exciting atmosphere -work into play
- Motivates others to develop fresh ideas
- Rally support
- Imagine possibilities
*
Spirited Leaders
Most Effective
Situations in which people need to be motivated to develop innovative ideas.
Less Effective
Urgent situations in which deadlines must be met and in situations in which long-term planning is vital.
*
Considerate Leaders
- Create a comfortable environment
- Build cohesiveness / team harmony
- Take everyone’s input into account
- Follow procedures that are “tried and true”
- Provide support
- Provide team harmony
*
Considerate Leaders
Most Effective
In sensitive situations requiring patience, tact, and team harmony.
Least Effective
Situations requiring quick adjustments because of unforeseen changes in which the need to take charge of others is crucial.
*
Systematic Leaders
- Provides structure for activities
- Makes sure people do not overlook important data
- Require accuracy and precision
- Makes decisions based on facts
- Strong orientations toward objectivity
*
Systematic Leaders
Most Effective
Situations calling for careful long-term planning, accuracy, and objective analysis.
Less Effective
Situations requiring quick decision-making or when flexibility is needed
*
Are leaders born or made?
The Answer: BOTH
Attributes
Developmental
Experiences
Leadership
Success
Leadership Development =
V+C+L
Variety of Experiences +
Challenging Assignments +
Ability & Willingness to Learn
—Center for Creative Leadership
*
“There are two kinds of people in organizations: Those with 20 years experience and those with one year experience repeated 20 times.”
*
Assessment of
Key Positions
Identification of
Key Talent
Assessment of
Key Talent
Generation of
Development Plans
Development
Monitoring & Review
Key
Elements
Succession Planning: Key Elements
*
1. Assessment of Key Positions:
• What are the competencies and experiences needed
to qualify for each key position?
2. Identification of Key Talent:
• Typically people at the top two levels of the organization
and high potential employees one level below.
• Identified by their management’s assessment of their
performance and potential for advancement.
3. Assessment of Key Talent:
• For each person on the radar screen, primary development
needs are identified focusing on what they need in order
to be ready for the next level.
Succession Planning: Key Elements
*
4. Generation of Development Plans:
• A development plan is prepared for how we will help the
person develop over the next year.
5. Development Monitoring & Review
• An annual or semi-annual succession planning review is
held to review progress of key talent and to refresh or
revise their development plan.
Succession Planning: Key Elements
*
FOUR LEVERS FOR LEARNING
55-65%
25-30%
5-10%
5-10%
*
Highest Return…
New Position Focused On Development Needs
Job Enrichment Based On Development Needs
Temporary P&L Assignments
Cross Functional Project Leadership Or Assignment
Leadership Coaching & Counseling
University Leadership Program
Industry Presentations
Customer Visits Accompanying Senior Executives
Custom Education Programs
Full 360 Degree Feedback and Evaluation
Motivated Self Development
Seminars and Conferences
… Lowest Return
LEADERRSHIP
DEVELOPMENT
PROGRAMS
*
Leadership Development Plan
Overall Performance Summary:
(Indicate recent performance including major accomplishments
or performance issues.)
Key Strengths:
(List 2 - 3. Indicate key technical or professional competencies,
skills, or knowledge the person has.)
Development Needs:
(List 2 or 3. Indicate key experiences, skills, or knowledge the
person lacks in order to move to the next level.)
*
Leadership Development Plan
Development Actions:
1. On The Job: (What new responsibilities do you plan to assign
to help this person develop this year?)
2. Special Assignment: (What task force, projects, or special
assignments will be given this year to aid development?)
3. Training: (What specific training or seminars are
recommended this year for his/her development?)
*
Leadership Development Plan
Potential For Promotion:
(Indicate this persons readiness to be promoted to the next
organizational level.)
___ Ready now for the next level.
___ Ready in the next 24 months.
___ Ready in 2 to 3 years.
Recommended Next Position: (List the next assignment that
would most benefit the individual in his/her development.)
*
Designing an HR System (Project): Objectives
Organizational Culture
- Objectives: What type of culture needs to be reinforced? Why?
Leadership
- Objectives: What type of leader is needed to execute the business strategy? What key specific leadership characteristics are required? Why?
*
Designing an HR System (Project): Practices
Organizational Culture
- Practices: Which HR practices support this culture? How?
Leadership
- Practices: How will you find and/or develop leaders. What specific practices? Why?
*
VI. Executing Strategy
1. How grow?
2. What strategic capabilities/culture?
3. What obstacles?
4. How overcome?
5. How accelerate?
6. How measure success?
Six Questions for Line Executives
The Leader’s Message
Strategy Implementation
Human Resource Management
Competitive Advantage
Strategy
Organizational Structure and Control
Strategic Leadership
*
6 Key Elements of a Strategic Plan
Actions
Initiatives
Vision
Strategy
Mission
Objectives
What do we want to be?
(in relation to our strategy) .
How we will get there?
What we will achieve?
What we need to change in order to “get there”?
What steps will we take and who is accountable?
What, Where, How?
*
“We will be a leader of our industry in the future, committed to delivering excellent quality and service to our customers, increasing returns to our shareholders, showing responsibility to the environment, and building a highly motivated and empowered workforce…”
Key Questions
*
1. To what extent does our workforce understand our firm’s strategy, how well we’re doing, and what we must do to be strategically successful?
2. What are our firm’s strategic capabilities and what is our inventory of top talent in our strategic positions?
3. To what extent are we getting the critical behaviors necessary to make our business model a reality?
4. To what extent are our strategic positions creating the wealth (revenue enhancement or cost reduction) that sustains our growth, provides job security, and reinforces the success of our business model?
Understand the Drivers of Success
Improve Shareholder Value
Revenue Growth Strategy
Productivity Strategy
Enhance the Franchise
Enhance Customer Value
Improve Cost Structure
Improve Asset Utilization
Shareholder Value
ROCE
New Product Revenue
Customer Profitability
Cost per Unit
Asset Utilization
Financial Perspective
Customer Perspective
Internal Perspective
Learning & Growth Perspective
“Build the Franchise”
“Increase Customer Value”
“Operational Excellence”
“Good Neighbor”
(Innovation Processes)
(Customer Management Process)
(Operations & Logistics Process)
(Regulatory & Environmental Processes)
Customer Value Proposition
Customer Intimacy
Product Leadership
Customer Satisfaction
Customer Acquisition
Customer Retention
Price
Product/Service Attributes
Quality
Time
Function
Service
Relations
Brand
Op Excellence
Relationship
Image
A Motivated and Prepared Workforce
Awareness
Alignment
Incentives
Infrastructure
Applications
Skills
Knowledge Sharing
Strategic Competencies
Climate for Action
Strategic Technologies
Create the Right Measures: Balanced Scorecard
What Must You Excel At?
What do you need to excel at to meet these changing customer needs?
Upon which of these themes will you differentiate yourself?
What barriers are in the way?
Internal
Perspective
Product
Innovation
Customer
Intimacy
Operational Excellence
Regulatory
Management
Source: Kaplan & Norton
*
What skills and competencies does your organization need to have in the next 3-5 years?
What drives motivation in your organization?
What work force behavior should be developed in the next 3-5 years?
What technology or infrastructure should be in place to support the strategic direction?
How will members of your organization know when it is headed in the right strategic direction?
How will the organization need to learn and grow?
Learning and Growth
Perspective
Work Environment
Leadership
Skills
Shared Mindset
Motivation
*
Workforce Behaviors
Workforce Mindset/Culture
Workforce Competencies
The Workforce Scorecard:
Success Metrics for Every Leader
Workforce Success
What leaders want all
employees to understand
What leaders want all
employees to do to deliver
the firm’s strategy
What our firm must be
able to do to create its competitive advantage
What specific business
objectives leaders must deliver (HR’s Deliverables)
Executing Workforce Strategy: The Process
ACCOUNTABILITY IS A CAPABILITY!
CEO/Executive Team Business & Workforce Strategy Expectations
Business Leader/Line Manager Workforce Expectations
HR Function Workforce Expectations
· Strategic Choice
· Firm Culture
· Strategic Capabilities
· Workforce Philosophy
· Leader Accountability
· HR Accountability
· Workforce Mindset/Culture
· “A” Positions
· “A” Players
· “B” Players with “A” Potential
· Developmental Plans for “A” and “B” Players
· “C” Player Exits
· Cascade Accountability
· Workforce Differentiation Practices
· Selection
· Development
· Performance Management
· Rewards
· Communication
· Work Design
· Workforce Metrics
· Culture/Mindset
· Strategic Capabilities
· Performance
Customer Success
What specific customer desires and expectations must be satisfied?
Financial Success
What specific financial commitments must be met?
Operational Success
What specific internal operational processes must be optimized?
Balanced Scorecard
Workforce Success
Has the workforce accomplished the key strategic objectives for the business?
Leadership and Workforce Behaviors Are the leader-ship team and workforce consistently behaving in ways that will lead to achieving our strategic objectives?
Workforce Mind-set and Culture Does the workforce understand our strategy and embrace it, and do we have the culture we need to support strategy execution?
Workforce Competencies
Does the workforce, especially in the key or “A” positions, have the skills it needs to execute our strategy?
Workforce
Scorecard
HR
Scorecard
HR Systems
- Align
- Integrate
- Differentiate
HR Workforce
Competencies
- Strategic partner
- Change agent
- Employee advocate
- Administrative expert
- Work design
- Staffing
- Development
- Performance management
- Rewards
- Communication
HR Practices
Managing
Human Capital to Execute Strategy
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Align Your HR System
Work Environment
Employee Attitudes and Behaviors
Employee Competencies
Job Design - Decisions / Empowerment
Organizational Structure – Flat, Hierarchical
Recruitment, Selection, Training & Development
Performance Management Goals
Evaluation and Appraisal
Compensation and Incentives
Organizational Challenges
Environmental Challenges
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Preparing for Strategic Transformation
- Four key components for rapid growth
- Strategy
- Organization design
- Culture and values
- Leadership and people
The 4 R’s
- Reframing the Organization: Core competencies and markets served: What business should we be in? How should we operate? Who do we need to be?
- Restructuring: how can we support this new picture
- Revitalization – growth – every new beginning has an ending associated
- Renewal – engaging the minds and hearts of the organization –investing in individuals
Strategic Success
What really works (4+2)*
* Joyce, Nohria, and Roberson (2003)
THE PRIMARY FOUR:
1. Strategy: Devise and maintain a clearly stated, focused strategy
2. Execution: Develop and maintain flawless operational execution
3. Culture: Develop and maintain a performance-oriented culture
4. Structure: Build and maintain a fast, flexible, flat organization
THE SECONDARY FOUR:
1. Talent: Hold on to talented employees and find more
2. Leadership: Keep leaders and directors committed to the business
3. Innovation: Make innovations that are transforming
4. Mergers and partnerships: Make growth happen with mergers and partnerships
Findings
- The best (companies that consistently out performed the rest) had to be really good at all FOUR foundation practices
- Strategy, Execution, Culture, Structure
- The best (companies that consistently out performed the rest) had to be really good at TWO of the complimentary (any two!!)
- Talent, Leadership, Innovation, Mergers and partnerships
This has become the 4 + 2 formula
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4+2 Differentiators on “Strategy”
Source: What Really Works, Joyce et. al., p. 72
Keep growing your core business; beware of the unfamiliar
Clearly communicate your strategy internally and externally
Develop strategy from the outside in
Build a strategy around a clear value proposition for the customer
Maintain antennae to marketplace changes and fine-tine strategy
Primary
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4+2 Differentiators on “Execution”
Source: What Really Works, Joyce et. al., p. 110
Constantly strive to improve productivity and eliminate waste
Empower front lines to respond to customer needs
Deliver products and services to consistently meet customers’ expectations
Primary
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4+2 Differentiators on “Culture”
Source: What Really Works, Joyce et. al., p. 133
Establish and abide by clear company values
Create a working environment that is challenging, satisfying and fun
Reward achievement but keep raising the bar
Inspire all to do their best
Primary
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4+2 Differentiators on “Structure”
Source: What Really Works, Joyce et. al., p. 158
Put your best people closest to the action and keep your frontline stars in place
Promote cooperation and information exchange across the company
Eliminate layers and bureaucratic behaviors; simplify
Primary
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4+2 Differentiators on “Talent”
Source: What Really Works, Joyce et. al., p. 184
Become personally involved in winning the war for talent
Design jobs that challenge your best performers
Create and maintain
top-tier training and education programs
Fill mid and high-level jobs with internal talent
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4+2 Differentiators on “Leadership”
Source: What Really Works, Joyce et. al., p. 203
Closely link the pay of the leadership team to their performance
Appoint a board of directors with a financial stake in the company’s success
Hone capacity to spot opportunities and problems early
Inspire management to strengthen relationships with people at all levels
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4+2 Differentiators on “Innovation”
Source: What Really Works, Joyce et. al., p. 221
Don’t hesitate to cannibalize existing products
Exploit new and old technologies to design products and enhance operations
Introduce disruptive technologies and business models
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4+2 Differentiators on “Mergers and Partnerships”
Source: What Really Works, Joyce et. al., p. 237
Build a systematic capability to find, screen, and close deals
Move into new businesses that use partners’ talents
Enter businesses that
complement existing strengths
Acquire relationships that lever existing customer relationships
What are the strategies/initiatives of, company, division, department?
Why are these the initiatives?
How are they measured?
How do these initiatives and measures affect me?
How can I affect them?
What are my specific objectives?
How will I be measured?
How will other initiatives/measures impact me?
If I affect the initiatives/measures, what is the benefit to:
my division, my department and... to me?
People need answers to several questions in order to effectively understand how Strategy applies to them.
From those who create it to those who can implement it!
Making the Plan Understandable
Communication Strategy
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Characteristics of Strategic Leaders
- Clear practical executable vision – skills to create a vision
- Willingness to change – skills to lead change
- Willingness to ask the tough questions – skills in questioning, listening and giving feedback
- Willingness to innovate – creativity and facilitation, challenge the status quo
- Willingness to include – building relationships internally and externally
Barriers to Change
Success
History / Founding
Cognitive schema
Top management team composition
Culture
HR Systems
Competitive Dynamics
HURDLES
- Policy versus practice (Design versus implementation)
- What level of analysis is appropriate to target interventions?
- How do you get those who implement strategies to carry them out (in practice) appropriately?
- How to implement an effective change management initiative?
Overcoming Implementation Hurdles
- Communicate a Clear Vision
- Develop Meaningful Metrics – Create line of sight
- Ensure Leadership Buy in – Make necessary TMT changes
- Manage Competencies – A players in A positions
- Manage the Work Environment – Redesign jobs and organizational structures aligned with the business strategy
- Manage Behaviors – Establish new goals and align with compensation and incentive plans
- Implement an effective Change Management Program
What Stimulates Organizational Change?
Major external forces / shifts:
- Shift in domestic policy
- Substantial cuts in funding
- Decreased market opportunity
- Dramatic increase in services
- Global events
Reactive
Generally respond by reviewing technical or structural opportunities.
Proactive
Strategic decision to shift product or service to anticipate /create new or niche markets
Slide *
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Kinds of Change
- Incremental
- Smaller change that aligns systems and practices with strategy
- Tweaking the system or process
- Transitional
- Restructuring, reorganizing
- Transformational
- Results in major and comprehensive redirection of the organization
- New vision, new mission, new values
John Kotter
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Four Areas of
Organizational Change
Strategy: a transformation in Goals, Boundaries, Activities
Structure & Culture : change of people or authority relationships
Organizational Systems: change of competencies, motivation, work environment
People: Reluctance, commitment, collaboration
Four Areas of
Organizational Change
Strategy: a transformation in Goals, Boundaries, Activities
Structure & Culture : change of people or authority relationships
Organizational Systems: change of competencies, motivation, work environment
People: Reluctance, commitment, collaboration
Four Areas of
Organizational Change
Strategy: a transformation in Goals, Boundaries, Activities
Structure & Culture : change of people or authority relationships
Organizational Systems: change of competencies, motivation, work environment
People: Reluctance, commitment, collaboration
Four Areas of
Organizational Change
Strategy: a transformation in Goals, Boundaries, Activities
Structure & Culture : change of people or authority relationships
Organizational Systems: change of competencies, motivation, work environment
People: Reluctance, commitment, collaboration
Transformations do not occur in organizations – they occur within people’s minds
Both management AND employees
The Importance of People
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Why People Resist Change
- Rational or irrational reaction to
- Uncertainty
- Actual, perceived, or imaged threats
- Parochial self-interest
- Misunderstanding
- Lack of trust
- Different assessments
- Low tolerance for change
Reducing Resistance to Change
- Employee resistance can be reduced by utilizing:
- Education and communication
- Participation and involvement
- Facilitation and support
- Negotiation and agreement
- Explicit and implicit coercion
Managing Change
- Determine Desired State
- Identify Key Players
- Determine Needed Commitment
- Assess Present Commitment
- Determine Gaps
- Identify Driving & Restraining Forces
- Determine Leverage Points
- Act
Change Model
- Unfreeze
- Assess readiness
- Overcome Resistance
- Change
- Transition Phase
- Build coalition/Develop consensus
- Refreeze
- Establish new norms/culture
- Reward/Punish
- Renewal
- Monitor/Evaluate
- Learning/Improvement
Change Model
- Analysis-------------Vision
- Design---------------Model of Change
- Communicate------Consensus & Coalition
- Implement--------- Action Plan
- Institutionalize-----New Culture
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Overview of Change Processes
- Leading change (WHO)
- Creating a shared need (WHY)
- Shaping a vision (WHAT)
- Mobilizing commitment (WHO ELSE)
- Using levers for change (HOW)
- Monitoring progress (HOW)
- Making it last (HOW)
Kotter’s Change Model
Establishing a sense of urgency
Creating the guiding coalition
Developing a vision and strategy
Communicating the change vision
Empowering broad-based action
Generating short-term wins
Consolidating gains and producing more change
Anchoring new approaches in the culture
Failing to follow these steps is the reason why change initiatives fail.
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Establishing a Sense of Urgency
Actions Needed
- Examine market competitive realities for potential crises and untapped opportunities
- Convince at least 75% of your managers that the status quo is more dangerous than the unknown
Pitfalls
- Underestimating the difficulty of driving people from their comfort zones
- Becoming paralyzed by risks
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Form a Powerful Guiding Coalition
Actions Needed
- Assemble a group with shared commitment and enough power to lead the change effort
- Encourage them to work as a team outside the normal hierarchy
Pitfalls
- No prior experience in teamwork at the top
- Relegating team leadership to a staff or strategic planning executive rather than a business executive or senior line manager
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Create a Vision
Actions Needed
- Create a vision to direct the change effort
- Develop strategies for realizing that vision
Pitfalls
- Presenting a vision that is too complicated or vague to be communicated effectively in five minutes
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Communicate the Vision
Actions Needed
- Use every vehicle possible to communicate the new vision and the strategies for achieving it
- Teach new behaviors by the example of the guiding coalition
Pitfalls
- Under communicating the vision
- Behaving in ways antithetical to the vision
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Empower Others to Act on the Vision
Actions Needed
- Getting rid of obstacles to change
- Remove or alter systems or structures undermining the vision
- Encourage risk taking and nontraditional ideas, activities, and actions
Pitfalls
- Failing to remove powerful individuals who resist the change effort
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Plan for and Create Short-term Wins
Actions Needed
- Define and engineer visible performance improvements
- Recognize and reward employees contributing to those improvements
Pitfalls
- Leaving short-term success up to chance
- Failing to score success early enough (12-24 months into the change effort)
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Consolidate Improvements and Produce More Change
Actions Needed
- Use increased credibility from early wins to change systems, structures, and policies undermining the vision
- Hire, promote, and develop employees who can implement the vision
- Reinvigorate the change process with new projects and change agents
Pitfalls
- Declaring victory too soon – with the first performance improvement
- Allowing resistors to convince “troops” that the war has been won
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Institutionalize New Approaches
Actions Needed
- Articulate connections between new behaviors and corporate success
- Create leadership development and succession plans consistent with the new approach
Pitfalls
- Not creating new social norms and shared values consistent with changes
- Promoting people into leadership positions who don’t personify the new approach
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Change Agent Skills
Team Player
Process skills: Understanding both relationships and tasks
Political skills: To form and work with coalitions
Understanding interests: principled negotiations
Building organizational capabilities and accountability
Fair, flexible, fast, friendly
CONFLICT DEFINED
“Conflict is a felt struggle between two or more interdependent individuals over perceived incompatible differences in beliefs, values, and goals, or over differences in desires for control, status and connectedness.”
Wilmot & Hocker (2011)
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CONFLICT MANAGEMENT STYLES
Degree of Cooperation
Non-supportive
Supportive
Dominant
Submissive
Accommodation
Collaboration
Competition
Avoidance
Compromise
High Relationship
Low Issue
High Relationship
High Issue
Low Relationship
High Issue
Low Relationship
Low Issue
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Degree of Assertiveness
The Conflict Grid
COMPETING
Win-lose power struggles are fought out.
COLLABORATING
Looking for Solutions to satisfy both parties’ concerns.
ACCOMMODATING
Tend to please the other party than meet its own needs.
COMPROMISING
Middle-ground positions are accepted. “Divide the pie.”
AVOIDING
Tend to behave as indifferent to concerns of both parties.
0 1 2 3 4 5 6 7 8 9
Concern for satisfying self / Assertive
Concern for satisfying the other party / Cooperative
2
1
3
4
5
6
7
8
9
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