Module 3
Performance Management and Strategic Planning
A. Purposes of Strategic Planning
Strategic planning is a process that involves describing the organization’s
destination, assessing barriers that stand in the way of that destination, and selecting
approaches for moving forward. The main goal of strategic planning is to allocate
resources in a way that provides organizations with a competitive advantage.1 Overall, a
strategic plan serves as a blueprint that defines how the organization will allocate its
resources in pursuit of its goals. Strategic planning serves the following purposes: First
and foremost, strategic planning allows organizations to define their identities. In other
words, it provides organizations with a clearer sense of who they are and what their
purposes are. Second, strategic planning helps organizations prepare for the future
because it clarifies the desired destination. Knowing where the organization wants to go
is a key first step in planning how to get there.
Strategic planning empowers organizations to systematically analyze their
external environment, thereby enhancing their capacity to adapt to changes and anticipate
future developments. Strategic planning involves a thorough analysis of the external
environment, encompassing factors such as market trends, competitive dynamics,
regulatory shifts, technological advancements, economic conditions, and societal
changes. By systematically gathering and assessing this information, organizations gain a
comprehensive understanding of the forces shaping their operating environment. Through
environmental analysis, organizations uncover insights that guide adaptive strategies and
decisions. Understanding market trends and customer preferences allows organizations to
align their products, services, and operational practices with evolving demands.
Awareness of regulatory changes and insights into technological advancements
play pivotal roles in shaping organizational strategies and operations. Staying informed
about regulatory changes relevant to the industry and geographic locations where the
organization operates is crucial. Regulatory requirements can impact various aspects of
business operations, including product development, manufacturing processes, marketing
practices, and customer data handling. Organizations that are proactive in monitoring and
understanding regulatory changes can anticipate compliance requirements and integrate
them into their strategic planning. This proactive approach helps mitigate legal risks,
avoid penalties, and maintain a positive reputation with stakeholders. By incorporating
regulatory compliance into strategic planning, organizations can allocate resources
effectively to implement necessary changes, train employees on new requirements, and
ensure ongoing adherence to standards. This ensures that the organization operates within
legal frameworks while minimizing disruption to business operations.
Understanding technological advancements relevant to the industry enables
organizations to identify opportunities for innovation and operational improvement.
Technologies such as artificial intelligence, automation, data analytics, and digital
platforms can enhance efficiency, productivity, and customer experience. Organizations
that leverage technological insights can develop strategies to adopt new technologies or
enhance existing systems. This strategic integration of technology supports innovation in
product development, process optimization, supply chain management, and customer
engagement. By embracing technological advancements, organizations can gain a
competitive advantage by offering differentiated products or services, improving
operational efficiencies, reducing costs, and responding more quickly to market demands.
Technologies that streamline processes, automate routine tasks, and provide real-
time data insights contribute to operational efficiency. This allows organizations to
allocate resources more efficiently, minimize waste, improve decision-making, and adapt
quickly to changing market conditions. In summary, awareness of regulatory changes and
insights into technological advancements are critical for organizations seeking to enhance
compliance, drive innovation, and achieve operational efficiencies. By integrating these
insights into strategic planning and decision-making processes, organizations can
navigate regulatory landscapes effectively, capitalize on technological opportunities, and
maintain competitiveness in dynamic markets.
Strategic planning enables organizations to forecast and anticipate future changes
in their environment. By identifying emerging trends and potential disruptors early on,
organizations can prepare contingency plans, adjust strategic priorities, and position
themselves to capitalize on opportunities before competitors. Anticipatory insights foster
a proactive stance, reducing the likelihood of being caught off-guard by rapid shifts in the
external landscape. As part of strategic planning, organizations often engage in scenario
planning exercises. This involves developing alternative future scenarios based on
different environmental conditions and assessing their implications on business
operations. Scenario planning helps organizations prepare flexible strategies and
responses that can be activated based on how future events unfold, thereby enhancing
adaptive capacity. Informed by environmental analysis, strategic planning facilitates
robust decision-making processes. Leaders and managers can evaluate strategic options,
prioritize initiatives, allocate resources effectively, and align organizational capabilities
with external opportunities and threats. This data-driven approach ensures that decisions
are aligned with the organization’s long-term objectives and responsive to environmental
dynamics.
Strategic planning fosters a culture of continuous learning and improvement
within organizations. Regular environmental scanning and analysis encourage ongoing
monitoring of trends and feedback loops. This iterative process allows organizations to
refine strategies, update assumptions, and integrate new insights into future planning
cycles, thereby enhancing their adaptive capabilities over time. By leveraging
environmental analysis and adaptation strategies, organizations can sustain a competitive
advantage in dynamic markets. Proactively adapting to changes and anticipating future
trends enables organizations to differentiate themselves, innovate ahead of competitors,
and capture new opportunities that arise in evolving business landscapes. In essence,
strategic planning empowers organizations to analyze their environment
comprehensively, anticipate future changes, and adapt proactively. By integrating
environmental insights into decision-making processes and fostering a culture of agility
and foresight, organizations can navigate uncertainty effectively, capitalize on
opportunities, and sustain long-term success in a rapidly changing world.
Knowledge of the environment serves as the foundational first step towards
enabling organizations to potentially adapt and respond effectively to changes and
challenges. Knowledge of the external environment—such as market trends, consumer
preferences, technological advancements, regulatory changes, and competitive dynamics
—provides organizations with critical insights into factors that may impact their
operations. This understanding allows organizations to anticipate potential disruptions or
opportunities, positioning them to proactively adjust strategies and tactics accordingly.
By staying informed about the environment, organizations can identify emerging
opportunities that align with their strategic goals and capabilities. This proactive
approach enables organizations to capitalize on new market niches, innovate products or
services, and expand into new geographic regions or customer segments. Knowledge of
market trends and customer needs guides strategic decision-making towards avenues that
offer growth and sustainability.
In addition to opportunities, environmental knowledge helps organizations assess
and mitigate risks effectively. Understanding regulatory changes, competitive threats,
economic fluctuations, and other external factors allows organizations to develop
contingency plans and risk management strategies. This proactive risk assessment
minimizes potential disruptions to operations and enhances organizational resilience.
Knowledge of the environment informs strategic decision-making processes at all levels
of the organization. Leaders can use environmental insights to evaluate alternative
courses of action, weigh potential outcomes, and align decisions with long-term
objectives. This data-driven decision-making fosters clarity, confidence, and alignment
with the external realities that shape organizational success. Continuous monitoring and
analysis of the environment promote a culture of organizational learning and adaptation.
Organizations that prioritize gathering and interpreting environmental knowledge are
better equipped to learn from past experiences, adjust strategies in real-time, and
continuously improve their capabilities. This adaptive learning process enables
organizations to evolve and stay relevant in a dynamic and competitive business
environment.
Armed with knowledge of the environment, organizations can enhance their
agility and responsiveness to changing circumstances. They can quickly pivot strategies,
reallocate resources, and innovate in response to shifting market conditions or unexpected
disruptions. This agility enables organizations to maintain a competitive edge and seize
opportunities swiftly while minimizing the impact of external threats. While knowledge
of the environment does not guarantee successful adaptation on its own, it lays the
groundwork by providing organizations with essential information and insights needed to
navigate complexities, make informed decisions, and proactively shape their future. By
leveraging this knowledge effectively, organizations can position themselves to thrive
amidst uncertainty, drive innovation, and sustain long-term growth in an evolving
business landscape.
Strategic planning plays a crucial role in providing organizations with focus and
guiding them in the effective allocation of resources towards priorities that matter most.
Strategic planning involves a systematic process of defining the organization's mission,
vision, values, and strategic objectives. This clarity helps leadership and stakeholders
understand what the organization aims to achieve and the strategic priorities that will
drive its success. By identifying and prioritizing goals, strategic planning ensures that
resources are directed towards initiatives that align with these priorities. A strategic plan
outlines specific goals and objectives that require resources such as finances, manpower,
technology, and time. By aligning resources with strategic goals, organizations ensure
that investments support initiatives that contribute directly to achieving desired outcomes.
This alignment prevents resources from being scattered or misallocated, optimizing their
impact on organizational success.
Strategic planning provides a framework for informed decision-making across all
levels of the organization. Leaders can use the strategic plan as a reference point to
evaluate opportunities, assess risks, and make decisions that are aligned with long-term
objectives. This structured approach to decision-making ensures that choices are
strategic, coherent, and supportive of the organization's overarching goals. By focusing
resources on strategic priorities, organizations improve operational efficiency and
effectiveness. Strategic planning enables leaders to prioritize tasks, streamline processes,
and eliminate redundancies or inefficiencies that detract from achieving goals. This focus
on efficiency ensures that resources are utilized optimally to maximize productivity and
performance outcomes. A strategic plan serves as a communication tool that aligns
stakeholders around common goals and objectives. It fosters a shared understanding of
organizational priorities, expectations, and the rationale behind resource allocation
decisions. Clear communication of strategic intent enhances collaboration, coordination,
and unity of purpose throughout the organization.
Strategic planning equips organizations with the agility to navigate change and
uncertainty in the external environment. By regularly reviewing and updating the
strategic plan, organizations can anticipate shifts in market conditions, customer
preferences, technological advancements, and regulatory changes. This proactive
approach allows organizations to adjust strategies, reallocate resources, and seize
opportunities while mitigating risks. Strategic planning includes mechanisms for
monitoring progress towards goals and measuring outcomes against predefined metrics.
This accountability ensures that performance is regularly evaluated, gaps are identified,
and corrective actions are taken as needed to stay on track. This cycle of monitoring and
evaluation promotes a culture of accountability and continuous improvement within the
organization. In summary, strategic planning provides organizations with focus by
defining priorities, aligning resources with strategic goals, improving decision-making,
enhancing efficiency, facilitating communication, adapting to change, and promoting
accountability. By leveraging strategic planning processes effectively, organizations can
optimize their operations, achieve sustainable growth, and maintain competitiveness in a
dynamic and evolving business landscape.
In turn, the improved allocation of resources is likely to stimulate growth and
improve profitability. Fifth, strategic planning can produce a culture of cooperation
within the organization given that a common set of goals is created. Such a culture of
cooperation can gain organizations a key competitive advantage. Sixth, strategic planning
can be a good corporate eye-opener because it generates new options and opportunities to
be considered. New opportunities to be considered may include expanding to new
markets or offering new products. Finally, strategic planning can be a powerful tool to
guide employees’ daily activities because it identifies the behaviors and results that really
matter.
A strategic plan serves as a foundational document that provides essential
information and guidance for the development and implementation of a performance
management system within an organization. The strategic plan articulates the
organization’s mission, vision, values, goals, and objectives over a defined period. It
outlines the direction and priorities that guide decision-making and resource allocation
across the organization. By aligning performance management objectives with these
strategic goals, organizations ensure that individual and team efforts contribute directly to
overarching organizational success. The strategic plan helps establish clear performance
expectations and benchmarks against which employee performance can be evaluated. It
defines key performance indicators (KPIs) and metrics that reflect progress towards
strategic objectives.
Aligning performance management practices with organizational goals ensures
that the efforts and initiatives within an organization are directed towards achieving
outcomes that are critical for its success. By aligning performance management practices
with organizational goals, employees and teams gain clarity on what specific outcomes
and objectives they are expected to achieve. This clarity helps prioritize activities and
resources towards initiatives that directly contribute to the organization's strategic
priorities. Organizational goals set the strategic direction and priorities for the entire
organization. Performance management practices, such as setting performance objectives,
defining key performance indicators (KPIs), and conducting performance evaluations,
can then be structured to emphasize these strategic priorities.
Aligning performance management practices with organizational goals ensures
that efforts within the organization are focused on activities that have the highest
potential to contribute to long-term success. This strategic alignment is crucial for
maximizing effectiveness and achieving sustainable growth. Organizational goals define
the strategic priorities and direction for the organization. By aligning performance
management practices with these goals, leaders can prioritize activities and initiatives that
directly support the achievement of strategic objectives. This ensures that resources, time,
and effort are allocated to areas that have the greatest potential to drive long-term
success. Performance management systems linked to organizational goals typically define
key performance indicators (KPIs) that measure progress towards strategic outcomes.
These KPIs provide a clear focus on specific metrics and milestones that indicate success
in achieving desired results. By monitoring and aligning efforts with these KPIs,
organizations ensure that activities are aligned with strategic priorities and contribute
meaningfully to overall success.
Aligning performance management with organizational goals sets clear
expectations for employees regarding what is important and how their contributions
impact the organization's success. Clear performance objectives and targets tied to
strategic goals provide a roadmap for employees to align their efforts and prioritize tasks
that are directly linked to achieving desired outcomes. When performance management
practices are aligned with organizational goals, resources such as budget, manpower, and
technology investments can be allocated more strategically. Organizations can direct
resources towards initiatives and projects that are aligned with strategic priorities,
maximizing the return on investment and ensuring efficient use of resources. Strategic
alignment of performance management enables informed decision-making at all levels of
the organization. Leaders can use performance data and insights to make decisions about
resource allocation, process improvements, talent development, and strategic
adjustments. This data-driven approach ensures that decisions are based on objective
assessments of performance against strategic goals, leading to more effective outcomes.
Performance management aligned with organizational goals supports a culture of
continuous improvement and adaptability. By regularly reviewing performance against
strategic objectives, organizations can identify areas for enhancement, adjust strategies as
needed, and capitalize on emerging opportunities. This agility allows organizations to
stay responsive to changing market dynamics and maintain competitiveness over the long
term. In essence, aligning performance management practices with organizational goals
ensures that efforts are directed towards activities that are strategically significant and
have the potential to yield the greatest impact on achieving long-term success. This
alignment fosters a unified approach towards organizational objectives, enhances
performance accountability, and drives sustained performance excellence across the
organization.
Performance management practices aligned with organizational goals provide a
framework for measuring success and progress towards strategic objectives. Clear
performance indicators linked to organizational goals enable leaders and managers to
track performance, assess outcomes, and make informed decisions to steer the
organization towards achieving its desired results. When performance management
practices are aligned with organizational goals, accountability becomes more transparent
and meaningful. Employees understand how their individual contributions contribute to
broader organizational success. This alignment fosters a sense of ownership and
responsibility among employees, motivating them to strive towards achieving shared
goals.
Aligning performance management with organizational goals helps in optimizing
resource allocation. It ensures that resources such as time, budget, and talent are allocated
to initiatives and projects that align with strategic priorities and are most likely to deliver
desired outcomes. This strategic allocation of resources enhances efficiency and
effectiveness in achieving organizational objectives. In a dynamic business environment,
aligning performance management practices with organizational goals allows for greater
adaptability and alignment with changing market conditions, customer needs, and
industry trends. Performance management can be adjusted or refined to ensure that it
remains relevant and responsive to evolving organizational goals and external challenges.
Overall, the alignment of performance management practices with organizational goals
ensures that efforts are purposefully directed towards achieving outcomes that matter
most to the organization's success. It creates a cohesive framework where individual and
team performance contributes synergistically towards achieving overarching strategic
objectives, driving sustained growth, competitiveness, and organizational excellence.
Strategic plans often prioritize initiatives, projects, and resource allocation
strategies based on their alignment with strategic objectives. Performance management
systems can use this prioritization to allocate resources effectively, identify critical areas
for improvement or investment, and ensure that efforts are directed towards activities that
yield the highest strategic impact. A strategic plan provides a framework for decision-
making at all levels of the organization. Performance management systems use strategic
insights to evaluate performance, assess outcomes, and make informed adjustments to
strategies and tactics. This strategic alignment enables proactive decision-making that
supports continuous improvement and adaptation to changing internal and external
environments.
By linking performance management to strategic objectives, organizations
enhance accountability and transparency in their operations. Employees understand how
their individual contributions contribute to organizational success, fostering a sense of
ownership and alignment with organizational goals. Performance management systems
reinforce accountability by tracking progress towards strategic milestones and promoting
a culture of results-oriented performance. Strategic plans often emphasize organizational
values and desired cultural attributes that support long-term success. Performance
management systems reinforce these values by aligning performance expectations with
desired behaviors, competencies, and cultural norms. This alignment helps cultivate a
cohesive organizational culture that promotes collaboration, innovation, and continuous
learning.
Strategic plans provide a basis for evaluating performance management practices
and identifying areas for enhancement or refinement. Organizations can assess the
effectiveness of performance measures, feedback mechanisms, and development
initiatives in driving progress towards strategic goals. This iterative process of evaluation
and improvement ensures that performance management systems remain responsive and
adaptive to organizational needs. In summary, a strategic plan serves as a cornerstone for
effective performance management by providing direction, clarity, and alignment with
organizational goals. By leveraging strategic insights, performance management systems
can enhance decision-making, accountability, and organizational effectiveness, ultimately
driving sustainable growth and competitive advantage. Integrating strategic planning
principles into performance management practices enables organizations to optimize
performance, maximize employee engagement, and achieve long-term success in a
dynamic business environment.
B. Process of Linking Performance Management to the Strategic Plan
The mere presence of a strategic plan does not guarantee that this information will
be used effectively as part of the performance management system. In fact, countless
organizations spend thousands of hours creating strategic plans that lead to no tangible
actions. Many organizations spend too much time and effort crafting their mission and
vision statements without undertaking any concrete follow-up actions. The process then
ends up being a huge waste of time and a source of frustration and long-lasting cynicism.
For example, consider a recent study including more than 350 individuals in firms in
India in the following eight sectors: textiles, staple fiber, chemicals, cement, insulators,
aluminum, mining, and services. Examples of companies included in this study are
Grasim Cement, Jayashree Textiles, Birla NGK Insulators, Essel Mining Industries, and
INDAL (Indian Aluminum Industries). Results indicated that although there was a good
strategic planning process in place in most firms, there was no clear relationship between
firm-level and individual-level goals. Thus, to ensure that strategy cascades down the
organization and leads to concrete actions, a conscious effort must be made to link the
strategic plan with individual performance.
The organization’s strategic plan includes a mission statement and a vision
statement as well as goals and strategies that will allow for the fulfillment of the mission
and vision. The strategies are created with the participation of managers at all levels. The
higher the level of involvement, the more likely it is that managers will see the resulting
strategies favorably.3 As soon as the organizational strategies have been defined, senior
management proceeds to meet with department or unit managers, who in turn solicit input
from all people within their units to create unit-level mission and vision statements,
goals, and strategies. A critical issue is to ensure that each unit’s or department’s mission
and vision statements, goals, and strategies are consistent with those at the organizational
level. Job descriptions are then revised to make sure they are consistent with unit and
organizational priorities. Finally, the performance management system includes results,
behaviors, and developmental plans consistent with the organizational- and department-
level priorities as well as the individual job descriptions.
Does the process of aligning organizational, unit, and individual priorities actually
work in practice? Is this doable? The answer to these questions is “yes” and the benefits
of doing so are widely documented. Performance management systems have a critical
role in translating strategy into action.4 In fact, a recent study including 338
organizations in 42 countries found that performance management is the third most
important factor affecting the success of a strategic plan. This is particularly true for
larger organizations and for organizations that operate in rapidly changing environments.
As a concrete example, consider the case of Key Bank USA, a financial services
company with assets of $92 billion that provides investment management, retail and
commercial banking, consumer finance, and investment banking products and services.
Key Bank of Utah successfully developed a performance management system that is
aligned with the strategic plan of the organization.5 To do this, the bank first involved
managers at all hierarchical levels to develop an organization mission statement. Next, it
developed goals and strategies that would help achieve Key Bank’s mission. The mission
statement, goals, and strategies at the organizational level served as the foundation for
developing the strategies for individual departments and units. To develop these, senior
managers met with each department manager to discuss the organization’s goals and
strategies and to explain the importance of having similar items in place in each
department. Subsequently, each of the departmental managers met with his or her
employees to develop the department’s mission statement and goals. One important
premise in this exercise was that each department’s mission statement and objectives had
to be aligned with the corporate mission statement, goals, and strategies. After
organizational and departmental goals and strategies were aligned, managers and
employees reviewed individual job descriptions. Each job description was tailored so that
individual job responsibilities were clear and contributed to meeting the department’s and
the organization’s objectives. Involving employees in this process helped them to gain a
clear understanding of how their performance affected the department and, in turn, the
organization. In sum, to be most useful, organizations’ performance management systems
must rely on their strategic plans. The behaviors, results, and developmental plans of all
employees must be aligned with the vision, mission, goals, and strategies of the
organization and unit. Organizations can expect greater returns from implementing a
performance management system when such alignment is in place.
The development of an organization’s strategic plan requires a careful analysis of
the organization’s competitive situation, the organization’s current position and
destination, the development of the organization’s strategic goals, the design of a plan of
action and implementation, and the allocation of resources (human, organizational,
physical) that will increase the likelihood of achieving the stated goals.6 There are
several steps that must be considered in the creation of a successful strategic plan. These
include (1) the conduct of an environmental analysis (i.e., the identification of the internal
and external parameters of the environment in which the organization operates); (2) the
creation of an organizational mission (i.e., statement of what the organization is all
about); (3) the creation of an organizational vision (i.e., statement of where the
organization intends to be in the long term, say, about 10 years); (4) setting goals (i.e.,
what the organization intends to do in the short term, say, one to three years); and (5) the
creation of strategies that will allow the organization to fulfill its mission and vision and
achieve its goals (i.e., descriptions of game plans or how-to procedures to reach the stated
objectives). After each of these issues has been defined, organizational strategies are
created so that the mission and vision are fulfilled and the stated goals are met.
The strategic planning process is not linear, however. For example, there may first
be a rough draft of the organization’s mission and vision and then the conduct of an
environmental analysis may follow to help define the mission and vision more clearly. In
other words, the mission and vision may be drafted first and the environmental analysis
may follow second. The important point is that there is a constant interplay among these
issues: the vision and mission affect the type of environmental analysis to be conducted,
and the results of an environmental analysis are used to revise the mission and vision. By
necessity, we need to discuss them one by one; however, keep in mind that they affect
and inform each other on an ongoing basis. Let’s begin with a discussion of
environmental analysis.
The first step in conducting a strategic plan is to step back to take in the “big
picture.” This is accomplished through what is called an environmental analysis. An
environmental analysis identifies external and internal parameters with the purpose of
understanding broad issues related to the industry where the organization operates so that
decisions can be made against the backdrop of a broader context.7 An examination of the
external environment includes a consideration of opportunities and threats. Opportunities
are characteristics of the environment that can help the organization succeed. Examples
of such opportunities might be markets not currently being served, untapped labor pools,
and new technological advances. On the other hand, threats are characteristics of the
external environment that can prevent the organization from being successful. Examples
of such threats range from economic recession to the innovative products of competitors.
For example, consider the case of Frontier, which is currently the second largest jet
carrier at Denver International Airport with an average of 250 daily departures and
arrivals. Frontier is an affordable-fare airline which provides service to 60 cities, 50 in the
United States, 8 in Mexico, and 2 in Canada. Frontier commenced operations in July
1994 given two key opportunities in the external environment. First, a major competing
airline engaged in a dramatic downsizing of its Denver operations, leading to service gaps
in various major markets that Frontier filled. Second, the city of Denver replaced the
heavily congested Stapleton Airport with the much larger Denver International Airport.8
In February 2004, United Airlines, the largest carrier operating out of Denver
International Airport, made changes in the environment that may have had a direct impact
on Frontier’s strategic plan: United Airlines launched its own low-fare affiliate. The new
affiliate, Ted, is going toe-to-toe with Frontier. Peter McDonald, vice president for
operations for United Airlines, reported that Ted’s cost per available seat mile is in the
ballpark of Frontier’s 8.3 cents.9 So, what had been an opportunity for Frontier may no
longer remain one, given the launching of Ted.
Although an examination of external trends is important for all types of
organizations, this issue is particularly important for multinational organizations because
they are concerned with both domestic and international trends. In fact, monitoring the
external environment is so important in the strategic planning of multinational
organizations that a survey of U.S. multinational corporations showed that 89% of
departments responsible for the assessment of the external environment report directly to
a member of the board of directors.10 An examination of the internal environment
includes a consideration of strengths and weaknesses. Strengths are internal
characteristics that the organization can use to its advantage. For example, what are the
organization’s assets and the staff’s key skills? At Frontier, several key executives from
other airlines were recruited, an important strength that was considered before launching
the airline in 1994. These executives created a senior management team with long-term
experience in the Denver market. Weaknesses are internal characteristics that are likely to
hinder the success of the organization. These could include an obsolete organizational
structure that does not allow for effective organization across units and creates the
misalignment of organizational-, unit-, and individual-level goals.
The best combination of external and internal factors occurs when there is an
opportunity in the environment and a matching strength within the organization to take
advantage of that opportunity. These are obvious directions that the organization should
pursue. Consider the case of IBM, the world’s largest information technology company
as well as the world’s largest business and technology services provider (US$ 36 billion).
In the past few years, IBM has concluded that the PC-driven client-server computing
model no longer applies and that network-based computing is taking over. This
realization shifted the focus to servers, databases, and software for transaction
management. Furthermore, IBM recognized the upsurge of network-connected devices
including personal digital assistants (PDAs), cell phones, and video game systems. To
take advantage of this external opportunity, IBM now focuses its resources on supporting
network systems, developing software for the network-connected devices, and
manufacturing specialized components. IBM has also improved its server technology and
revamped its storage systems. IBM built up its software capabilities through internal
development and outside acquisitions. In short, IBM developed a leverage factor by
identifying internal strengths that matched external opportunities, which in turn leads to a
successful business model.
In a constraint situation, the external opportunity is present; however, the internal
situation is not conducive to taking advantage of the external opportunity. At IBM, this
situation could have taken place if IBM did not have the internal capabilities to develop
software for the network-connected devices and specialized components. The external
opportunity would still be there but, absent the internal capabilities, it would not turn into
an advantageous business scenario. In this situation, there is an external threat, but this
threat can be contained because of the presence of internal strengths. If this had been the
case at IBM, the company would not have been able to take advantage of a new situation;
nevertheless, existing strengths would have allowed IBM to continue to operate in other
areas. In the worst scenario, there is an external threat and an accompanying internal
weakness. For example, in the 1980s, IBM refused to adapt to the demands of the
emerging microcomputer market (i.e., today’s PCs). IBM did not have the internal
capability to address customers’ needs for PCs and instead continued to focus on its
internal strength: the mainframe computer. IBM’s poor performance in the early 1990s
was a direct consequence of this problem situation: the external threat (increasing
demand for PCs and dwindling demand for mainframe computers) was met with an
internal weakness (the lack of ability to shift internal focus from the mainframe to the
PC).
Consider the organization you are currently working for, or the organization for
which you have worked most recently. Try to identify one leverage and one problem
based on an analysis of opportunities, threats, strengths, and weaknesses. What was the
situation like? What were the results? In sum, the process of creating a strategic plan
begins with an environmental analysis, which considers internal as well as external
trends. Internal trends can be classified as either strengths or weaknesses, and external
trends can be classified as either opportunities or threats. A gap analysis consists of
pairing strengths and weaknesses with opportunities and threats and determining whether
the situation is advantageous (i.e., leverage), disadvantageous (i.e., problem), or
somewhere in between (i.e., constraint and vulnerability).
After the environmental analysis has been completed and the gap analysis reveals
an organization’s leverage, constraints, vulnerabilities, and problems, the members of the
organization must determine who they are and what they do. This information will then
be incorporated into the organization’s mission statement. The mission statement
summarizes the organization’s most important reason for its existence. Mission
statements provide information on the purpose of the organization and its scope.
Presumably, this mission statement was preceded by an environmental analysis
examining internal and external trends. We do not have information on this. What we do
know is that this mission statement provides some information regarding the four
questions noted earlier. Based on this mission statement, we have information about why
the company exists (i.e., “to refresh the world”) and the scope of the organization’s
activities (i.e., “to create value and make a difference”). The mission statement does not,
however, include information about who are the customers served and what are the
products and services offered. Also, there is no information about specific products (e.g.,
Sprite, Minute Maid, Powerade, Dasani). More specific and detailed information is
needed if Coca-Cola’s mission statement is to be used by its various units to create their
own mission statements. More detailed information is also needed if both the
organization and unit mission statements will be used as input for individual job
descriptions and for managing individual and team performance.
An organization’s vision is a statement of future aspirations. In other words, the
vision statement includes a description of what the organization would like to become in
the future (about 10 years in the future). Vision statements are typically written after the
mission statement is completed because the organization needs to know what it is and
what its purpose is before they can figure out who they will be in the future. Note,
however, that mission and vision statements are often combined and, therefore, in many
cases it is difficult to differentiate one from the other. In such cases, the vision statement
usually includes two components: a core ideology, which is referred to as the mission,
and an envisioned future, which is what is referred to as the vision per se. The core
ideology contains the core purpose and core values of an organization, and the envisioned
future specifies long-term objectives and a picture of what the organization aspires to.
Spectrum Brands (formerly Rayovac Corporation) provides an example of combining
mission and vision into one statement. Spectrum Brands is a global consumer products
company and a leading supplier of batteries, kitchen appliances, shaving and grooming
products, personal care products, pet supplies, and home and garden products. Originally
founded in 1906 as the French Battery Company in Madison, Wisconsin, and renamed
Rayovac Company during the 1930s, the company changed its name to Spectrum Brands
in 2005 to reflect its diverse portfolio and position as a publicly-held company which
employs 10,000 individuals worldwide.
We will be a low-cost manufacturer and the high-value supplier in our business
segments. We will innovate, using our ingenuity and creativity to provide better
solutions. We will maintain our focus on where we can be the best and apply our
expertise to do it better. We will conduct our business ethically and with transparency.
We will establish rigorous financial goals that will drive our business decisions and
measure our progress. We will strive to attain a superior rate of return and maintain trust
with our investors. We will be a conscientious global citizen, a responsive community
neighbor, and a responsible steward of the earth’s natural resources. Greif’s vision
statement is clearly future oriented. It provides direction and focus. In addition, it
includes several features that are required of useful vision statements. First, it focuses
attention on what is most important and thus eliminates unproductive activities.
The vision statement serves as a foundational element that provides a context for
evaluating new external opportunities and threats within an organization. The vision
statement outlines the organization’s long-term aspirations and strategic direction. It
articulates goals related to growth, market expansion, innovation, and other key
objectives. By specifying a focus on profitable growth in the industrial packaging and
services business, the vision statement guides decision-making and resource allocation
towards opportunities that align with this strategic priority. Based on the vision
statement’s guidance, the organization can systematically identify external opportunities
in the industrial packaging and services sector. This includes market trends, customer
needs, technological advancements, regulatory changes, and competitive dynamics.
Opportunities may arise from gaps in the market, emerging trends in packaging solutions,
advances in technology that enhance service offerings, or changes in customer
preferences towards sustainable packaging solutions.
The vision statement provides a framework for evaluating potential opportunities
against strategic criteria. It helps prioritize opportunities that have the greatest potential to
contribute to profitable growth and align with the organization’s core competencies.
Evaluation criteria may include market attractiveness, competitive landscape, financial
feasibility, alignment with organizational values, and scalability of the opportunity within
the industrial packaging and services sector. In addition to opportunities, the vision
statement also facilitates the assessment of external threats that could impact the
organization’s objectives. Threats may include competitive pressures, economic
downturns, regulatory changes, technological disruptions, or shifts in customer
preferences. Understanding potential threats allows the organization to proactively
mitigate risks through strategic planning, contingency measures, and adaptation of
business strategies. With insights gained from evaluating opportunities and threats within
the context of the vision statement, the organization can prioritize strategic initiatives and
investment decisions. This includes capitalizing on identified growth opportunities in
industrial packaging and services through market expansion, product innovation,
partnerships, or acquisitions. Investment decisions are informed by the potential for
sustainable growth, profitability, and alignment with long-term strategic objectives
outlined in the vision statement.
The vision statement supports organizational agility by encouraging continuous
monitoring of external factors and adaptation of strategies as needed. This agility allows
the organization to seize emerging opportunities, navigate challenges, and stay responsive
to dynamic market conditions. Regular review and refinement of the vision statement
ensure its relevance and alignment with evolving external opportunities and threats,
fostering a proactive approach to strategic planning and execution. In conclusion, the
vision statement serves as a guiding beacon for organizations seeking to evaluate new
external opportunities and threats. By providing clarity on strategic priorities and
aspirations, it enables focused decision-making, strategic alignment, risk assessment, and
proactive pursuit of growth opportunities such as expanding into the industrial packaging
and services business.
Consider Microsoft’s vision statement of “putting a computer on every desk and
in every home,” which was the vision when CEO Bill Gates started the MS-DOS
operating system in the 1980s. This vision statement was such a stretch that it was
considered ludicrous at a time when the mainframe computer still reigned supreme and
the first minicomputer models (now PCs) were being made and sold. But that vision is
now a reality. Microsoft has come up with a new vision: “putting a computer in every car
and every pocket”. In sum, a vision statement includes a description of future aspirations.
Whereas the mission statement emphasizes the present, the vision statement emphasizes
the future.
After an organization has analyzed its external opportunities and threats as well as
internal strengths and weaknesses and has defined its mission and vision, it can
realistically establish goals that will further its mission. The purpose of setting such goals
is to formalize statements about what the organization hopes to achieve in the medium- to
long-range period (i.e., within the next three years or so). Goals provide more specific
information regarding how the mission will be implemented. Goals can also be a source
of motivation and provide employees with a more tangible target for which to strive.
Goals also provide a good basis for making decisions by keeping desired outcomes in
mind. And, finally, goals provide the basis for performance measurement because they
allow for a comparison of what needs to be achieved versus what each unit, group, and
individual is achieving.
Consider the case of Harley-Davidson, Inc., the motorcycle manufacturer. In
January 2004, Jeffrey L. Bleustein, chairman and chief executive officer, said that the
expectation was to continue to grow the business. Specifically, he said that the new goal
was to satisfy a yearly demand of 400,000 Harley-Davidson motorcycles in 2007.
Moreover, he also said that he was confident that Harley-Davidson, Inc., would be able to
deliver an earnings growth rate in the mid-teens for the foreseeable future.15 These goals
provide a clear direction for Harley-Davidson. In fact, they provide useful information to
guide unit-level goals as well as individual and team performance. The entire
organization has a clear sense of focus because all members know that there is a goal to
deliver 400,000 motorcycles in 2007.
At this point, we know what the organization is all about (mission), what it wants
to be in the future (vision), and some intermediate steps to follow to get there (goals).
What remains is a discussion of how to fulfill the mission and vision and how to achieve
the stated goals. This is done by creating strategies, which are descriptions of game plans
or how-to procedures to reach the stated objectives. The strategies could address issues of
growth, survival, turnaround, stability, innovation, and leadership, among others. The
human resources (HR) function plays a critical role in creating and implementing the
strategies that will allow the organization to realize its mission and vision.
As you can see, the mission of the training and education unit is consistent with
the overall mission in that the realization of full potential plays a central role. Of course,
MSTE’s mission is more focused on issues specifically relevant to the training and
education function. Nevertheless, the link between the two mission statements is readily
apparent. The congruence between the mission of the organization and its various units is
important regardless of the type of industry and the size of the organization.
Highperforming organizations have a clear alignment in the mission and vision of the
overall and unit-level mission and vision statements. Consider the case of Norfolk State
University (NSU, http://www.nsu.edu/), located in Norfolk, Virginia. NSU, with a
current enrollment of about 6,000 students, is the seventh-largest historically African
American university in the United States, and it serves many students who are the first in
their families to attend college. It offers more than 50 academic programs, including 16
master’s, and 2 doctoral degree programs.
The mission statement for the School of Business indicates that its goal is to
prepare students for careers in all types of organizations and this is achieved in a learning
environment that fosters academic achievement, professional growth, and a recognition
of diversity, technology, globalization, and ethics in the workplace and society.19 Note
that both mission statements are aligned and refer to similar issues including the (1)
delivery of a high-quality education and academic achievement to a (2) diverse student
body with the goal of (3) educating productive citizens who will contribute to a (4) global
society. In sum, the organization’s strategic plan including the mission, vision, goals, and
strategies cascades down to all organizational levels. Thus, each division or unit also
creates its own strategic plan, which should be consistent with the organization’s overall
plan.
Strategic consensus occurs when the various organizational units agree on a
common set of strategic priorities. Although it may seem that the greater the consensus
across units, the better firm performance, this is not always the case because we must
differentiate between consensus regarding strategies and consensus regarding goals. In
the early development of strategic management as a field, the dominant approach was for
a firm to focus first on goals, and then create strategies on how to compete. This process
has been described as “formal,” “normative,” or “grand strategy.” A more recent way of
thinking about consensus within the context of strategic planning has been influenced by
the industrial organization perspective from economics. This perspective argues that a
firm must first agree on a strategy (e.g., low cost or differentiation), and then
subsequently decide on goals. These two alternative sequences, strategies → goals versus
goals → strategies, were contrasted against each other in a study involving the heads of
purchasing and manufacturing of more than 100 manufacturing companies in Spain.
Results suggested that the strategies → goals sequence was superior in terms of
predicting firm performance. In sum, it is beneficial for the cascading of strategic
planning to first have units agree on common strategies before they agree on what goals
will be set to reach those strategic priorities.
Continuing with the sequence of components shown in Figure 3.1, job
descriptions also need to be congruent with the organization and unit mission, vision,
goals, and strategies. We discussed the job analysis process leading to the creation of job
descriptions in Chapter 2. After the strategic plan is completed, some rewriting of the
existing job descriptions may be in order. Recall the job description for Trailer Truck
Driver as used by the Civilian Personnel Management Service (U.S. Department of
Defense) (see the accompanying box). This description provides information about the
various tasks performed together with a description of some of the KSAs required for the
position. But what is the link with the organization and unit strategic plans? How do the
specific tasks make a contribution to the strategic priorities of the transportation division
and the organization as a whole? This description includes only cursory and indirect
information regarding these issues.
The assumption that proficient handling of bills of lading, expense accounts, and
other paperwork pertinent to shipments contributes to a smooth shipping operation and
thereby makes a meaningful contribution to the transportation division is plausible but
lacks clarity in demonstrating direct impact. Proficient handling of bills of lading,
expense accounts, and other paperwork is essential for ensuring operational efficiency
within the shipping process. Accurate documentation facilitates smooth coordination
between different stages of transportation, such as loading, transit, and delivery. Clear
and precise documentation reduces the risk of errors, delays, or disputes related to
shipments. This efficiency is crucial for meeting delivery schedules, minimizing
downtime, and optimizing resource utilization within the transportation division.
Proper handling of paperwork ensures compliance with regulatory requirements
and industry standards governing transportation operations. Bills of lading, for instance,
serve as legal documents that outline the details of goods being transported and their
ownership during transit. Compliance with regulatory requirements mitigates the risk of
fines, penalties, or legal disputes that could impact the transportation division’s
operations and reputation. Accurate expense accounting also supports financial
transparency and accountability, ensuring resources are effectively managed. Efficient
management of paperwork contributes to effective resource allocation and cost control
within the transportation division. By streamlining administrative processes related to
billing, expense tracking, and documentation, resources can be allocated more efficiently
to core operational activities. Cost control measures, such as accurate expense reporting
and monitoring, help identify cost-saving opportunities and optimize budget utilization.
This financial discipline supports overall profitability and sustainability of transportation
operations.
Smooth handling of paperwork enhances customer service and satisfaction levels.
Clear and timely communication through accurate bills of lading and expense accounts
ensures customers receive reliable information about their shipments. Improved customer
satisfaction leads to enhanced reputation and potential for repeat business. It also fosters
positive relationships with clients and stakeholders, reinforcing the transportation
division’s role as a trusted service provider. The link between proficient paperwork
handling and transportation division contribution can be strengthened through
performance evaluation metrics. Key performance indicators (KPIs) related to paperwork
accuracy, processing times, and compliance can measure operational effectiveness.
Regular evaluation allows for continuous improvement initiatives within the
transportation division. Feedback from performance reviews helps identify areas for
enhancement, streamline processes, and implement best practices to optimize workflow
and service delivery. In summary, while the connection between proficient handling of
paperwork and its direct contribution to the transportation division may not be
immediately apparent, a deeper examination reveals its critical role in operational
efficiency, compliance, cost control, customer satisfaction, and continuous improvement.
Clear communication of these benefits helps articulate the significance of administrative
tasks in supporting overall transportation operations and organizational goals.
On the other hand, consider a job announcement describing the position of
Performance Solutions Group Manager in Microsoft’s training and education unit (see
the accompanying box). This job description makes the link between the individual
position and MSTE quite clear. First, the description includes MSTE’s mission statement
so that individuals become aware of how their specific roles fit within the overall mission
of the department. Second, the job description includes language to the effect that the
work must lead to an “industry leading” product, which is consistent not only with
MSTE’s mission but also with Microsoft’s overall mission. Third, in the needed
qualifications section, there is a clear overlap between those needed for this specific
position and those mentioned in MSTE’s as well as in Microsoft’s overall mission. In
short, the person working as Performance Solutions Group Manager has a clear sense not
only of her position but also of how behaviors and expected results are consistent with
expectations about MSTE and Microsoft in general. In sum, the tasks and KSAs included
in individual job descriptions must be congruent with the organization’s and unit’s
strategic plans. In other words, job descriptions should include activities that, if executed
well, will help execute the mission and vision. Job descriptions that are detached from
strategic priorities will lead to performance evaluations focused on behaviors and results
that are not central to an organization’s success.
Finally, the performance management system needs to motivate employees to
display the behaviors and produce the results required to support the organization’s and
the unit’s mission, vision, and goals. Developmental plans need to be aligned with unit
and organizational priorities as well. Well-designed performance management systems
define a clear path from organizational mission, vision, and goals to individual and team
performance. This is critical because organizational success is a direct function of the
alignment between collective and individual objectives. In addition to serving as a
necessary guide for individual and team performance, knowledge of organization- and
unit-level mission and vision provides information about how to design the performance
management system. Specifically, there are many choices in how the system is designed.
For example, the system might place more emphasis on behaviors (i.e., processes) than
on results (i.e., outcomes), or the system might emphasize more short-term criteria (i.e.,
quarterly goals) than long-term criteria (triennial).
Knowledge of the organization and unit vision and mission allows the HR
function to make informed decisions about design choices. More detailed information on
each of the factors guiding each of these design choices is provided in subsequent
chapters. For now, as one illustration, assume an organization is producing a mature
product in a fairly stable industry. In this situation, an emphasis on behaviors rather than
results may be preferred because the relationship between processes and outcomes is well
known, and the top priority is that employees display reliable and consistent behaviors in
making the product. Regardless of the type of criteria used, be it behaviors or results,
these must be observable (i.e., the person rating the criteria needs to have the ability to
observe what is rated) and verifiable (i.e., there needs to be evidence to confirm the
criteria rated). As a second example, consider the actual case of Dell computers. Dell is
one of the top players in the personal computer industry through its mode of online direct
selling. Dell’s main strategic business strategy is to be a low-cost leader in an industry
that deals with a product that is increasingly regarded as a commodity. However, in
addition to a low-cost strategy, Dell has a customer relationship business strategy of
maintaining customer service at a high level, while reducing costs. Dell’s performance
management system provides a strong link between individual goals and organizational
performance by including a results component (i.e., cost) and a behavioral component
(i.e., customer service).21 At Dell, both low cost and high levels of customer service (for
both internal and external customers) are important dimensions of the performance
management system.
The revamped performance management system at Bankers Life and Casualty is
intricately linked to both strategic objectives and the organization's "winning culture,"
emphasizing the interaction between managers and team members. The performance
management system is designed to align closely with strategic objectives such as
achieving low costs and delivering high levels of customer service. By linking
performance metrics, goals, and incentives to these strategic priorities, the system ensures
that individual and team efforts are directly contributing to organizational success. Clear
alignment with strategic objectives helps employees understand how their daily tasks and
performance contribute to broader organizational goals. This clarity fosters a sense of
purpose and direction, motivating employees to prioritize activities that support strategic
outcomes.
Bankers Life and Casualty’s "winning culture" emphasizes the achievement of
personal and business objectives through effective interactions between managers and
team members. The performance management system supports this culture by facilitating
regular communication, feedback, and collaboration between managers and their teams.
Emphasis on interaction underscores the importance of ongoing coaching, development,
and support from managers. The system encourages dialogue about performance
expectations, progress towards goals, and opportunities for improvement, fostering a
supportive and growth-oriented work environment. By integrating aspects of the winning
culture into the performance management framework, the organization promotes
engagement, accountability, and teamwork among employees. This cultural alignment
reinforces organizational values and strengthens employee commitment to achieving
excellence in both individual and collective efforts.
The performance management system reinforces accountability by setting clear
performance expectations and metrics aligned with strategic objectives. Employees
understand what is expected of them and how their performance will be evaluated.
Recognition and rewards are tied to the achievement of both personal and business
objectives, reinforcing the organization’s commitment to recognizing and celebrating
individual and team successes. This reinforces positive behaviors and outcomes that
contribute to the organization’s winning culture. Linked to strategic objectives and
organizational culture, the performance management system supports continuous
improvement and adaptation. Regular performance reviews and feedback mechanisms
allow for adjustments in goals, strategies, and tactics to align with changing business
needs and market conditions.
The system encourages a cycle of learning and development, where insights from
performance evaluations and interactions between managers and team members inform
future goals and initiatives. This iterative process ensures that the organization remains
agile and responsive to internal and external dynamics. In conclusion, the strong linkage
of Bankers Life and Casualty’s performance management system to strategic objectives
and its winning culture enhances organizational alignment, promotes employee
engagement, supports accountability, and fosters a collaborative and achievement-
oriented work environment. By integrating these elements effectively, the organization
strengthens its ability to achieve long-term success and sustain a competitive edge in the
insurance industry.
C. Building Support
Given the many competing projects and the usual scarcity of resources, some
organizations may be reluctant to implement a performance management system.
Primarily, the reason is a lack of any perceived value added to a system that requires
many resources (particularly time from supervisors) and that seems to produce little
tangible payoffs. The need to align organization and unit priorities with the performance
management system is one of the key factors contributing to obtaining the much-needed
top management support for the system. Top management is likely to ask, “Why is
performance management important?” One answer to this question is that performance
management is the primary tool that will allow top management to carry out its vision.
The performance management system, when aligned with organization and unit priorities,
is a critical tool to (1) allow all employees to understand where the organization stands
and where it needs to go and (2) provide tools to employees (e.g., motivation,
developmental resources) so that their behaviors and results will help the organization get
there. Fundamentally, the implementation of any performance management system
requires that the “What’s in it for me?” question be answered convincingly. In the case of
top management, the answer to the “What’s in it for me?” question is that performance
management can serve as a primary tool to realize its vision.
Building support for the system does not stop with top management, however. All
participants in the system need to understand the role they play and receive a clear
answer to the “What’s in it for me?” question. Communication about the system is key.
This includes a clear description of the system’s mechanics (e.g., when the performance
planning meetings will take place, how to handle disagreements between supervisor and
employees) and the system’s consequences (e.g., relationship between performance
evaluation and rewards). As discussed in Chapter 1, not involving people in the process
of system design and implementation can create resistance, and the performance
management system may result in more harm than good.
Good communication played a crucial role in the successful launch of a revamped
performance management system at Bankers Life and Casualty. Communication clarified
the objectives and goals of the revamped performance management system to all
stakeholders, including employees, managers, and executives. Clear communication
ensured that everyone understood the purpose of the changes, how they aligned with
organizational goals, and what outcomes were expected. Transparent communication
about the process of revamping the performance management system built trust among
employees. It provided insights into why changes were necessary, how decisions were
made, and what criteria were used to evaluate performance. Transparency helped mitigate
resistance to change and fostered a sense of inclusiveness in the decision-making process.
Effective communication clearly defined performance expectations, metrics, and
accountability measures. Employees knew what was expected of them under the new
system, how their performance would be evaluated, and what support or resources would
be available to help them succeed. This clarity minimized ambiguity and enabled
employees to focus on achieving objectives aligned with organizational goals.
Communication channels facilitated ongoing feedback loops between employees,
managers, and HR personnel. Regular updates and opportunities for dialogue allowed for
adjustments to be made based on early feedback and lessons learned during the
implementation phase. This iterative process supported continuous improvement of the
performance management system over time. Communication ensured that employees and
managers were adequately informed about training and development opportunities related
to the new performance management system. Clear guidance on how to use performance
tools, conduct effective performance reviews, and provide constructive feedback
enhanced the system's effectiveness and adoption. Engaging communication encouraged
employee participation and buy-in throughout the launch process. By highlighting the
benefits of the revamped system, such as career development opportunities, fair
performance evaluation, and recognition of achievements, communication motivated
employees to embrace the changes and actively contribute to their success.
Effective communication from leadership, including senior executives and
department heads, demonstrated commitment and support for the revamped performance
management system. Leaders communicated the strategic importance of the changes,
showed confidence in the new processes, and reinforced the organization's dedication to
fostering a performance-driven culture. In summary, good communication during the
launch of the revamped performance management system at Bankers Life and Casualty
played a pivotal role in ensuring clarity, transparency, alignment with organizational
goals, employee engagement, and ongoing improvement. By keeping stakeholders
informed and engaged throughout the process, the organization successfully navigated
the complexities of change management and positioned itself for long-term success in
performance management.
Bankers Life and Casualty realized that a better link between strategy and
individual and team performance could be established by improving its performance
management process. The HR department, therefore, proceeded to overhaul the
performance management system so that the three areas of strategic importance just
outlined would be part of everyone’s performance evaluation and improvement efforts.
The design and implementation of the new system was a joint venture between the HR
and the communications departments. First, the HR and communications team spoke
candidly with the CEO about his expectations. The CEO responded with overwhelming
support, stating that the performance management system would be implemented for
every employee on preestablished dates, and that he would hold his team accountable for
making this happen. Then, to implement the performance management system, each unit
met with its VP. During these meetings, each VP discussed how his or her unit’s goals
were linked to the corporate goals. Next, HR and communications led discussions
surrounding goal setting, giving feedback, and writing developmental plans. Managers
were then given the opportunity to share any feedback, concerns, or questions that they
had about the program. During this forum, managers exchanged success stories and
offered advice to one another.
Sharing success stories with the CEO and subsequently with direct reports serves
several strategic purposes within an organization, particularly in reinforcing support for
programs and initiatives. Sharing success stories with the CEO acknowledges and
validates the achievements of teams or individuals involved in a program. This
recognition not only boosts morale but also reinforces the importance of the initiative and
encourages continued dedication and effort. When the CEO shares these success stories
with direct reports, it demonstrates direct leadership endorsement and support for the
program. This visibility from top leadership communicates to the entire organization that
the initiative is a priority and aligns with strategic goals. Success stories serve as
inspirational examples of what can be achieved through dedication and teamwork. By
sharing these stories, the CEO and other leaders motivate employees to strive for
excellence and contribute actively to organizational objectives.
Highlighting success stories in relation to specific programs or initiatives
reinforces their alignment with broader organizational goals and priorities. This
alignment fosters a unified organizational focus and encourages collaboration across
departments towards shared objectives. Sharing success stories can also communicate
and reinforce organizational values and culture. By celebrating achievements that
embody desired behaviors or outcomes, leaders promote a culture of excellence,
innovation, and continuous improvement. For employees, hearing success stories directly
from the CEO enhances transparency and provides insight into strategic decisions and
priorities. This transparency builds trust and confidence in leadership, fostering a positive
organizational climate.
Success stories often highlight best practices and effective strategies that
contribute to success. Sharing these insights with direct reports allows leaders to promote
these practices across the organization, facilitating knowledge sharing and continuous
learning. Overall, sharing success stories from programs or initiatives with the CEO and
then cascading them to direct reports is a powerful leadership tool. It strengthens
organizational alignment, reinforces support for strategic initiatives, motivates
employees, and promotes a culture of achievement and collaboration. By leveraging these
stories, organizations can cultivate a positive work environment and drive sustained
performance and success.
In short, the performance management system at Bankers Life and Casualty
helped all employees understand their contributions to the organization’s strategic plan.
This was a key issue that motivated the CEO to give unqualified support to the system.
This support gave a clear message to the rest of the organization that the performance
management system was an important initiative. The support of the CEO and other top
executives, combined with a high degree of participation from all employees and their
ability to voice concerns and provide feedback regarding the system, was a critical factor
in the success of the performance management system at Bankers Life and Casualty.
