Description
covers topics like strategy formulation and implementation, Mintzberg’s Types of Strategy, McKinsey’s Seven ‘S’ Framework and Structure and Strategy Implementation
Strategic Analysis and Choice
1
Process of Strategic Choice
• Strategic choice may be defined as
– a decision making process to select from among grand strategies the strategy that best meets organisation?s objectives – The decision involves
• • • • Focusing on strategic alternatives Analysing the strategic alternatives Evaluating the strategic alternatives Choosing from the strategic alternatives
2
Focusing on strategic alternatives
• Narrow down the choice to a manageable number of feasible strategies
– Possibility of ignoring some strategies in the process
• Gap analysis may be done
– Visualise future and work backward – Set objectives for future and work backward to see what can be reached with present efforts – Find the gap between projected and desired performance
3
Gap Analysis for focusing on strategic alternatives
Desired Performance Present Performance Performance Gap
Performance
Time
T1 T2
4
Gap Analysis for focusing on strategic alternatives
• Gap affects focus on alternatives • Evaluate the gap, its importance and the possibility of reducing it • At the corporate level
– When the gap is narrow adopt stability strategy – When the gap is large due to opportunities adopt growth strategy – When the gap is large due to past bad performance adopt retrenchment strategy
5
Gap Analysis for focusing on strategic alternatives
• At the business level
– Think in terms of competing – Think in terms of positioning as
• Cost leader • Differentiator • Focused
– Weigh the risks and benefits before making a choice – Choice leads to a situation of dynamic competitive positioning where differentiation and low cost are not discrete positions but lie on a continuum.
6
Dynamic competitive positioning
Differentiation (higher cost/higher price) Focused Differentiators Differentiators Focused Differentiators
Focused cost leaders Cost leaders Focused cost leaders Cost Leadership (lower cost/lower price)
7
Strategy Formulation and Implementation
• Two way linkages between Strategy Formulation and Implementation – Forward linkages • Implementation depends upon strategy – Backward linkages • Monitoring and feedback (may affect formulation)
Strategy Formulation
Strategy Implementation
8
Nature of Strategy implementation
• Action orientation
– Putting the formulated strategy into action through management processes
• Comprehensive in scope
– Covers all functions of management
• Demands varied skills
– To allocate resources, design structures and systems, formulate functional policies, operational effectiveness and leadership style
• Wide range involvement
– Formulation is at top level whereas implementation is at all levels
• Integrated process
– A holistic process
9
Strategy Implementation
• Three major aspects
– Activating strategies
• Structural-behavioural consideration • Create plans-programmes-projects-budgets-procedures, rules and regulations
– Managing change
• Deal with dynamic situation within and outside the organisation
– Degree of change: how much change? – Timing of change: when to change? – Areas of change: what to change?
– Achieving effectiveness
• Profitability, growth, market share • Quality and efficiency
10
Mintzberg?s Types of Strategy
Formulated strategy Intended strategy Implemented strategy
Deliberate strategy
Realised strategy
Unrealised strategy
Emergent strategy
11
McKinsey’s Seven ‘S’ Framework
• Richard Pascale and Anthony Athos and Tom Peters and Robert Waterman separately worked on the idea of seven „S? for strategy implementation in 1978. • McKinsey and company developed and used the 7 S model in 1980. • The basic idea of the model is that there are seven internal aspects of an organization. • The seven elements are categorized as either “hard” or “soft” elements.
– “Hard” elements are easy to define and the “Soft” elements are more difficult. Both elements are equally important for organization?s success.
McKinsey’s Seven ‘S’ Framework
System Structure
Skills
Shared Values (Culture)
Strategy
Staff
Style
13
McKinsey?s Seven „S? Framework
• When the seven „S? are in good alignment, an organisation is poised and energised to exercise strategy to the best of its ability. • Any one or more of these seven factors is driving force in changing an organisation at a point of time. • Job of strategists is to achieve a good fit among the seven S by making necessary alterations from time to time.
14
McKinsey’s Seven ‘S’ Framework
• Strategy: Strategy is created to maintain and make competitive benefit over the competition. • Structure: Structure is the way the organization is constructed and who reports to whom. • Systems: In systems the daily activities and events that staff members join in to get the job done. • Shared values: Shared values are also called “super ordinate goals”. These values are the center values of the company that are evidenced in the corporate culture and the general work. • Style: people have to adopt the style of leadership. • Staff: In staff employees and their general capabilities are included. • Skills: Skills are the actual skills of the employees who are working for the company.
McKinsey’s Seven ‘S’ Framework
Strategy: • What is our strategy? • How do we intend to achieve our objectives? • How are changes in customer demands dealt with? • How do we deal with competitive pressure? • How is strategy adjusted for environmental issues?
Structure: • What is the hierarchy? • How do the team members organize and align themselves? • How do the various departments coordinate activities? • Is decision making and controlling centralized or decentralized? • How is the company/team divided?
Systems: • What internal rules and processes does the team use to keep on track? • What are the main systems that run the organization? Consider financial and HR systems as well as communications and document storage. • Where are the controls and how are they monitored and evaluated?
Shared Values: • How strong are the values? • What are the fundamental values that the company/team was built on? • What are the core values? • What is the corporate/team culture?
Style:
• Do employees/team members tend to be competitive or cooperative? • How participative is the management/leadership style? • How effective is that leadership? • Are there real teams functioning within the organization or are they just nominal groups?
Staff: • What positions need to be filled? • Are there gaps in required competencies? • What positions or specializations are represented within the team?
Skills:
• Are there any skills gaps? • What is the company/team known for doing well? • What are the strongest skills represented within the company/team? • Do the current employees/team members have the ability to do the job? • How are skills monitored and assessed?
Structure and Strategy
• Suitable organisational structure is essential to implement strategies and achieve goals. • Organisational structure refers to the ways that tasks and responsibilities are allocated to individuals and the ways individuals are grouped into formal reporting relationships and number of levels in the hierarchy. • Structure is thus a means to facilitate smooth implementation of plans, policies and strategies.
23
Structure and Strategy
• The basic questions are:
– Structure follows strategy or – Strategy follows structure
• Generally speaking organisations perform more effectively when they implement strategy with most appropriate structure • Chandler: Strategy implementation requires structural changes, i.e. structure follows strategy
24
Structure and Strategy
• Structure-strategy compatibility is must for success of strategy. • A single product firm should employ a functional structure • A multi product firm should employ a divisional structure • A firm in several unrelated businesses should create SBUs • Early achievement of Structure-strategy fit can be a competitive advantage.
25
Types of Structures
• Functional Structure
– Similar and related occupational specialties are grouped together – Pyramid type shape – Clear chain of command – Suitable only for small and medium size firms
• Divisional Structure
– Dividing the large functional pyramids into smaller, flexible administrative units
• Product departmentation: fit for multi product firms • Geographic departmentation
26
Types of Structures
• Strategic Business Units
– Extension of divisional form – In most extreme form each SBU works as an autonomous unit with its own strategy and balance sheet – Periodically sends profits to parent – Degree of autonomy depends upon its size, profitability
• Project structure
– For a given period on a specific project (goal) – Usually has limited life
• Matrix structure
– Extension of project structure – Activities grouped across traditional structure – Duality of roles
27
Structure and Strategy Implementation
• • • • No single structure suitable to all strategies Therefore a structure-strategy fit is important Switching from one structure to another is costly exercise Successful implementation of strategy demands cooperation from all functional and divisional managers • Communication and coordination very important • Implementation includes setting policies, designing the organisation structures and developing a corporate culture.
28
Barriers to Strategy implementation
• Inability to manage change • Vague strategy statement • Inadequate guidelines for implementation • Inadequate information sharing • Unclear responsibility and accountability To overcome these barriers • Adopt a clear model of strategy implementation • Effective management of change
29
Behavioural Issues in Strategy Implementation
• Leadership and Power
• Directing and staffing
• Values and Ethics
• Managing change • Managing conflict
30
Leadership
• Leadership success is linked to the ability of a leader to exercise the right kind of influence at the right time, • Influence Tactics
– – – – – – – Consultation Persuasion Inspirational appeal Coalition Pressure tactics Upward appeal Exchange tactics
31
Power
• Leaders use power to influence and implement strategy • Types of Power
– Formal Power
• • • • Legitimate Reward Punishment Coercive
– Informal power
• Referent • Charisma • Information
32
Leadership Style and Strategy Implementation
• Growth Strategy with Concentration: Dynamic industry expert • Growth Strategy with Diversification: Analytical portfolio manager • Stability: Cautious profit planner • Retrenchment to save company: Turnaround specialist • Retrenchment to close company: Professional liquidator
When past CEO successful, company repeats the background (P&G: always from brand management route)
33
Leadership Style and Strategy Implementation
• Transformation leaders needed to bring culture change • Transformation leaders transmit a sense of mission, stimulate learning and inspire new way of thinking.
– Henry Ford envisioned a people?s car – Selling price dropped from $500 in 1913 to $390 in 1915 and $260 in 1925. – Time to produce car reduced from 12.5 worker hours in 1912 to 1.5 in 1914.
34
Directing and staffing
• Implementation of new strategy calls for new HR priorities
– Hiring people with new skills – Firing people with obsolete skills – Training existing people in new skills
A study of 102 companies following an acquisition shows that, 26% of old employees were asked to leave within one year and 61% within five years
35
Directing and staffing
• Insider vs outsider • Selective blend: internal when existing skills match new strategy else outsider
– – – – Stability: mainly internal Turnaround: outsiders with new skills/attitude Reorientation: outsider to replace weakness Differentiation strategy: People with high internal locus of control – Low Cost strategy: Expertise in production
36
Directing and staffing
• Retrenchment is combination of organising an d staffing • Downsizing very crucial
– – – – Necessary jobs may be eliminated VRS may bring negative outcome Overload on remaining employees Morale and productivity issues
Survey of 400 companies after downsizing: only 50% recorded improved earning 34% increased productivity 33% improved customer service 50% reported to refill the jobs within one year
37
Selection strategy
• Insider vs outsider • Four options
– Selective blend: internal when existing skills match new strategy else outsider – Stability: mainly internal – Turnaround: outsiders with new skills/attitude – Reorientation: outsider to replace weakness
Retrenchment
• Retrenchment is combination of organising and staffing • Downsizing very crucial
– – – – Necessary jobs may be eliminated VRS may bring negative outcome Overload on remaining employees Morale and productivity issues
Survey of 400 companies after downsizing: only 50% recorded improved earning 34% increased productivity 33% improved customer service 50% reported to refill the jobs within one year
Guidelines for successful retrenchment
• Eliminate unnecessary work • Contract out non core activity • Plan for long term efficiencies
– Redeployment – Maintenance – R&D
• Invest in employees
– – – – New job specification Performance standard Compensation package Training
40
Pre-departure Training
• • • • Cultural awareness programmes Language training Preliminary visits Practical assistance
Compensation Package
• Foreign service inducement / hardship premium • Allowances -cost of living allowance (COLA) -Home leave allowance -Relocation allowances -Education allowances -spouse assistance
Well defined repatriation plan
• Clear message by management that an international assignment is a condition for career progression • Plan to reduce anxiety over - the re-entry position - Fear of devaluing of the international experience -Fear of loss of status and pay
Values
•Values represent basic convictions that „a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite mode of conduct or end-state of existence. •We have a hierarchy of values that forms our value system. This system is identified by the relative importance we assign to values such as freedom, pleasure, self-respect, honesty, obedience, and equality.
44
Ethics
• Study of moral issues and choices • Concerned with right vs. wrong, good vs. bad • Ethics try to set the standard for the ultimate end or the highest good to be pursued • Normative; judgmental • Unstructured; abstract
45
No universal Standard
Different background of people Different experiences Value System Moral standards Ethics Behaviour
46
Work Ethics
A trade-off between economic objectives and social obligations
Management Dilemma : Choice between right and wrong (Gray areas)
47
Characteristics of Work Ethics
• Differ with individuals No unique solutions Multitude of alternatives • Have synchronic effects • Involve trade-off between costs & benefits profits and responsibility the ethical dilemma
48
Impact on strategy implementation
• Studies show that there is high positive correlation between value based business and success. • Companies facing global challenges are formulating globally consistent codes for ethical understanding and decision making at all levels.
49
Forces of Change
•
– –
Internal forces
Human Resource Factors Managerial Decisions
•
– – – –
External forces
Technological developments Demographic characteristics Market changes Social and political pressure
50
Change Actors
• Change Strategists – Contribute to initiating, planning and designing change
• Change Implementers – Flag bearers of change programs • Change Recipients – Affected by the change
51
Change levers
Technology Quality
Leadership
Marketing
Costs
Change levers
Leadership
• Without leadership organization is VICTIM of change rather MASTER of change. • The leader empowers the organizational members through appropriate changes, so employees feel important and work becomes exciting. • Creates a trusting culture and builds the credibility of the change programme.
Change levers
People • New organisational culture • New entrants • New skills • Changed relationships • Changed responsibilities
Change levers
Strategy
• It?s like a map that shows path and goal of change • It aims to create unity, cohesion, focus and energy. • it spells out the direction of change. • Strategy is different from vision statement. If the vision statement tells the organization where to go, the strategies tell how to reach there.
Change levers
Structure
• Change in roles, responsibilities, decision making, procedure and coordination mechanism. • More and more Organic structure characterized by: Less of hierarchy and rules More of teamwork Decentralisation
Change levers
Technology
• The term „Technology? does not refer to tools, equipment and machinery alone. It includes information, knowledge and expertise. • Faster and cheaper computers induced changes • New mobile communication devices also forced to change.
Change levers
Marketing
Contd…
• Customers are more quality and cost conscious. • More customization of products and services. • Demand more than mere delivery and aftersales service.
Strategy for Managing change
Do not Change Environment Don’t Change Company Change Environment
Avoid • ignore • hide
React • follow leader • reorganise
Influence • lobby • co-opt Anticipate • Strategic management
Change Company
59
Rules for Effective Change Management
• Work hard at establishing a sense of urgency • Form powerful coalition • Initiate change through informal discussion to get feedback and participation • Positively encourage objections • Listen actively • Plan and create short term gains • Institutionalise new approaches • Monitor the change and reinforce it
60
Create Learning Organisations
• Learning organisation is one that has developed continuous capacity to adapt and change. • It uses double-loop learning – Errors are corrected by modifying existing organisational objectives, policies, standard routines and not merely on basis of past practices.
61
Characteristics of Learning Organisations
• Shared vision • Creating new ways of solving problems
• A system of interrelationships
• Open communication
• Superiority of organisational interest
62
International Perspective of Change management
• MNCs/ Companies with offshore clients • New Market Development Strategy • Effective change management requires
– Training and knowledge of host country?s culture to expatriate. – Rational compensation package. – A well defined repatriation plan
Conflict
• A process that begins when one party perceives that another party has negatively affected, or is about to negatively affect, something that the first party cares about. • New Strategy implementation may bring out many such concerns among different group of persons.
Conflict management
CONFLICT MANAGEMENT
Conflict Resolution Techniques
Conflict Stimulation Techniques
Conflict management
CONFLICT RESOLUTION TECHNIQUES • Problem Solving : Analytical; face to face discussion • Super ordinate goals: Creating a shared goal that cannot be attained without the cooperation of each conflicting parties • Expansion of resources: expansion of resources can create a win win situation • Avoidance: Withdrawal or suppression of conflict • Smoothing: Playing down the difference and highlight common interest between conflicting parties • Compromise: Each party to conflict give something of value • Authoritative command: Management uses formal authority to resolve conflict and then conveys their wishes to concerned parties.
Conflict management
CONFLICT STIMULATION TECHNIQUES
• •
•
•
Communication: Using ambiguous or threatening messages Bringing in outsiders: adding employees to a group whose backgrounds values or styles differ from present members Restructuring the organization: realigning workgroup, altering roles, increasing inter dependence to disturb the status quo Appointing a devil’s advocate: designating a critique to purposely argue against the majority positions.
Conflict- handling Strategies
doc_788651969.ppt
covers topics like strategy formulation and implementation, Mintzberg’s Types of Strategy, McKinsey’s Seven ‘S’ Framework and Structure and Strategy Implementation
Strategic Analysis and Choice
1
Process of Strategic Choice
• Strategic choice may be defined as
– a decision making process to select from among grand strategies the strategy that best meets organisation?s objectives – The decision involves
• • • • Focusing on strategic alternatives Analysing the strategic alternatives Evaluating the strategic alternatives Choosing from the strategic alternatives
2
Focusing on strategic alternatives
• Narrow down the choice to a manageable number of feasible strategies
– Possibility of ignoring some strategies in the process
• Gap analysis may be done
– Visualise future and work backward – Set objectives for future and work backward to see what can be reached with present efforts – Find the gap between projected and desired performance
3
Gap Analysis for focusing on strategic alternatives
Desired Performance Present Performance Performance Gap
Performance
Time
T1 T2
4
Gap Analysis for focusing on strategic alternatives
• Gap affects focus on alternatives • Evaluate the gap, its importance and the possibility of reducing it • At the corporate level
– When the gap is narrow adopt stability strategy – When the gap is large due to opportunities adopt growth strategy – When the gap is large due to past bad performance adopt retrenchment strategy
5
Gap Analysis for focusing on strategic alternatives
• At the business level
– Think in terms of competing – Think in terms of positioning as
• Cost leader • Differentiator • Focused
– Weigh the risks and benefits before making a choice – Choice leads to a situation of dynamic competitive positioning where differentiation and low cost are not discrete positions but lie on a continuum.
6
Dynamic competitive positioning
Differentiation (higher cost/higher price) Focused Differentiators Differentiators Focused Differentiators
Focused cost leaders Cost leaders Focused cost leaders Cost Leadership (lower cost/lower price)
7
Strategy Formulation and Implementation
• Two way linkages between Strategy Formulation and Implementation – Forward linkages • Implementation depends upon strategy – Backward linkages • Monitoring and feedback (may affect formulation)
Strategy Formulation
Strategy Implementation
8
Nature of Strategy implementation
• Action orientation
– Putting the formulated strategy into action through management processes
• Comprehensive in scope
– Covers all functions of management
• Demands varied skills
– To allocate resources, design structures and systems, formulate functional policies, operational effectiveness and leadership style
• Wide range involvement
– Formulation is at top level whereas implementation is at all levels
• Integrated process
– A holistic process
9
Strategy Implementation
• Three major aspects
– Activating strategies
• Structural-behavioural consideration • Create plans-programmes-projects-budgets-procedures, rules and regulations
– Managing change
• Deal with dynamic situation within and outside the organisation
– Degree of change: how much change? – Timing of change: when to change? – Areas of change: what to change?
– Achieving effectiveness
• Profitability, growth, market share • Quality and efficiency
10
Mintzberg?s Types of Strategy
Formulated strategy Intended strategy Implemented strategy
Deliberate strategy
Realised strategy
Unrealised strategy
Emergent strategy
11
McKinsey’s Seven ‘S’ Framework
• Richard Pascale and Anthony Athos and Tom Peters and Robert Waterman separately worked on the idea of seven „S? for strategy implementation in 1978. • McKinsey and company developed and used the 7 S model in 1980. • The basic idea of the model is that there are seven internal aspects of an organization. • The seven elements are categorized as either “hard” or “soft” elements.
– “Hard” elements are easy to define and the “Soft” elements are more difficult. Both elements are equally important for organization?s success.
McKinsey’s Seven ‘S’ Framework
System Structure
Skills
Shared Values (Culture)
Strategy
Staff
Style
13
McKinsey?s Seven „S? Framework
• When the seven „S? are in good alignment, an organisation is poised and energised to exercise strategy to the best of its ability. • Any one or more of these seven factors is driving force in changing an organisation at a point of time. • Job of strategists is to achieve a good fit among the seven S by making necessary alterations from time to time.
14
McKinsey’s Seven ‘S’ Framework
• Strategy: Strategy is created to maintain and make competitive benefit over the competition. • Structure: Structure is the way the organization is constructed and who reports to whom. • Systems: In systems the daily activities and events that staff members join in to get the job done. • Shared values: Shared values are also called “super ordinate goals”. These values are the center values of the company that are evidenced in the corporate culture and the general work. • Style: people have to adopt the style of leadership. • Staff: In staff employees and their general capabilities are included. • Skills: Skills are the actual skills of the employees who are working for the company.
McKinsey’s Seven ‘S’ Framework
Strategy: • What is our strategy? • How do we intend to achieve our objectives? • How are changes in customer demands dealt with? • How do we deal with competitive pressure? • How is strategy adjusted for environmental issues?
Structure: • What is the hierarchy? • How do the team members organize and align themselves? • How do the various departments coordinate activities? • Is decision making and controlling centralized or decentralized? • How is the company/team divided?
Systems: • What internal rules and processes does the team use to keep on track? • What are the main systems that run the organization? Consider financial and HR systems as well as communications and document storage. • Where are the controls and how are they monitored and evaluated?
Shared Values: • How strong are the values? • What are the fundamental values that the company/team was built on? • What are the core values? • What is the corporate/team culture?
Style:
• Do employees/team members tend to be competitive or cooperative? • How participative is the management/leadership style? • How effective is that leadership? • Are there real teams functioning within the organization or are they just nominal groups?
Staff: • What positions need to be filled? • Are there gaps in required competencies? • What positions or specializations are represented within the team?
Skills:
• Are there any skills gaps? • What is the company/team known for doing well? • What are the strongest skills represented within the company/team? • Do the current employees/team members have the ability to do the job? • How are skills monitored and assessed?
Structure and Strategy
• Suitable organisational structure is essential to implement strategies and achieve goals. • Organisational structure refers to the ways that tasks and responsibilities are allocated to individuals and the ways individuals are grouped into formal reporting relationships and number of levels in the hierarchy. • Structure is thus a means to facilitate smooth implementation of plans, policies and strategies.
23
Structure and Strategy
• The basic questions are:
– Structure follows strategy or – Strategy follows structure
• Generally speaking organisations perform more effectively when they implement strategy with most appropriate structure • Chandler: Strategy implementation requires structural changes, i.e. structure follows strategy
24
Structure and Strategy
• Structure-strategy compatibility is must for success of strategy. • A single product firm should employ a functional structure • A multi product firm should employ a divisional structure • A firm in several unrelated businesses should create SBUs • Early achievement of Structure-strategy fit can be a competitive advantage.
25
Types of Structures
• Functional Structure
– Similar and related occupational specialties are grouped together – Pyramid type shape – Clear chain of command – Suitable only for small and medium size firms
• Divisional Structure
– Dividing the large functional pyramids into smaller, flexible administrative units
• Product departmentation: fit for multi product firms • Geographic departmentation
26
Types of Structures
• Strategic Business Units
– Extension of divisional form – In most extreme form each SBU works as an autonomous unit with its own strategy and balance sheet – Periodically sends profits to parent – Degree of autonomy depends upon its size, profitability
• Project structure
– For a given period on a specific project (goal) – Usually has limited life
• Matrix structure
– Extension of project structure – Activities grouped across traditional structure – Duality of roles
27
Structure and Strategy Implementation
• • • • No single structure suitable to all strategies Therefore a structure-strategy fit is important Switching from one structure to another is costly exercise Successful implementation of strategy demands cooperation from all functional and divisional managers • Communication and coordination very important • Implementation includes setting policies, designing the organisation structures and developing a corporate culture.
28
Barriers to Strategy implementation
• Inability to manage change • Vague strategy statement • Inadequate guidelines for implementation • Inadequate information sharing • Unclear responsibility and accountability To overcome these barriers • Adopt a clear model of strategy implementation • Effective management of change
29
Behavioural Issues in Strategy Implementation
• Leadership and Power
• Directing and staffing
• Values and Ethics
• Managing change • Managing conflict
30
Leadership
• Leadership success is linked to the ability of a leader to exercise the right kind of influence at the right time, • Influence Tactics
– – – – – – – Consultation Persuasion Inspirational appeal Coalition Pressure tactics Upward appeal Exchange tactics
31
Power
• Leaders use power to influence and implement strategy • Types of Power
– Formal Power
• • • • Legitimate Reward Punishment Coercive
– Informal power
• Referent • Charisma • Information
32
Leadership Style and Strategy Implementation
• Growth Strategy with Concentration: Dynamic industry expert • Growth Strategy with Diversification: Analytical portfolio manager • Stability: Cautious profit planner • Retrenchment to save company: Turnaround specialist • Retrenchment to close company: Professional liquidator
When past CEO successful, company repeats the background (P&G: always from brand management route)
33
Leadership Style and Strategy Implementation
• Transformation leaders needed to bring culture change • Transformation leaders transmit a sense of mission, stimulate learning and inspire new way of thinking.
– Henry Ford envisioned a people?s car – Selling price dropped from $500 in 1913 to $390 in 1915 and $260 in 1925. – Time to produce car reduced from 12.5 worker hours in 1912 to 1.5 in 1914.
34
Directing and staffing
• Implementation of new strategy calls for new HR priorities
– Hiring people with new skills – Firing people with obsolete skills – Training existing people in new skills
A study of 102 companies following an acquisition shows that, 26% of old employees were asked to leave within one year and 61% within five years
35
Directing and staffing
• Insider vs outsider • Selective blend: internal when existing skills match new strategy else outsider
– – – – Stability: mainly internal Turnaround: outsiders with new skills/attitude Reorientation: outsider to replace weakness Differentiation strategy: People with high internal locus of control – Low Cost strategy: Expertise in production
36
Directing and staffing
• Retrenchment is combination of organising an d staffing • Downsizing very crucial
– – – – Necessary jobs may be eliminated VRS may bring negative outcome Overload on remaining employees Morale and productivity issues
Survey of 400 companies after downsizing: only 50% recorded improved earning 34% increased productivity 33% improved customer service 50% reported to refill the jobs within one year
37
Selection strategy
• Insider vs outsider • Four options
– Selective blend: internal when existing skills match new strategy else outsider – Stability: mainly internal – Turnaround: outsiders with new skills/attitude – Reorientation: outsider to replace weakness
Retrenchment
• Retrenchment is combination of organising and staffing • Downsizing very crucial
– – – – Necessary jobs may be eliminated VRS may bring negative outcome Overload on remaining employees Morale and productivity issues
Survey of 400 companies after downsizing: only 50% recorded improved earning 34% increased productivity 33% improved customer service 50% reported to refill the jobs within one year
Guidelines for successful retrenchment
• Eliminate unnecessary work • Contract out non core activity • Plan for long term efficiencies
– Redeployment – Maintenance – R&D
• Invest in employees
– – – – New job specification Performance standard Compensation package Training
40
Pre-departure Training
• • • • Cultural awareness programmes Language training Preliminary visits Practical assistance
Compensation Package
• Foreign service inducement / hardship premium • Allowances -cost of living allowance (COLA) -Home leave allowance -Relocation allowances -Education allowances -spouse assistance
Well defined repatriation plan
• Clear message by management that an international assignment is a condition for career progression • Plan to reduce anxiety over - the re-entry position - Fear of devaluing of the international experience -Fear of loss of status and pay
Values
•Values represent basic convictions that „a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite mode of conduct or end-state of existence. •We have a hierarchy of values that forms our value system. This system is identified by the relative importance we assign to values such as freedom, pleasure, self-respect, honesty, obedience, and equality.
44
Ethics
• Study of moral issues and choices • Concerned with right vs. wrong, good vs. bad • Ethics try to set the standard for the ultimate end or the highest good to be pursued • Normative; judgmental • Unstructured; abstract
45
No universal Standard
Different background of people Different experiences Value System Moral standards Ethics Behaviour
46
Work Ethics
A trade-off between economic objectives and social obligations
Management Dilemma : Choice between right and wrong (Gray areas)
47
Characteristics of Work Ethics
• Differ with individuals No unique solutions Multitude of alternatives • Have synchronic effects • Involve trade-off between costs & benefits profits and responsibility the ethical dilemma
48
Impact on strategy implementation
• Studies show that there is high positive correlation between value based business and success. • Companies facing global challenges are formulating globally consistent codes for ethical understanding and decision making at all levels.
49
Forces of Change
•
– –
Internal forces
Human Resource Factors Managerial Decisions
•
– – – –
External forces
Technological developments Demographic characteristics Market changes Social and political pressure
50
Change Actors
• Change Strategists – Contribute to initiating, planning and designing change
• Change Implementers – Flag bearers of change programs • Change Recipients – Affected by the change
51
Change levers
Technology Quality
Leadership
Marketing
Costs
Change levers
Leadership
• Without leadership organization is VICTIM of change rather MASTER of change. • The leader empowers the organizational members through appropriate changes, so employees feel important and work becomes exciting. • Creates a trusting culture and builds the credibility of the change programme.
Change levers
People • New organisational culture • New entrants • New skills • Changed relationships • Changed responsibilities
Change levers
Strategy
• It?s like a map that shows path and goal of change • It aims to create unity, cohesion, focus and energy. • it spells out the direction of change. • Strategy is different from vision statement. If the vision statement tells the organization where to go, the strategies tell how to reach there.
Change levers
Structure
• Change in roles, responsibilities, decision making, procedure and coordination mechanism. • More and more Organic structure characterized by: Less of hierarchy and rules More of teamwork Decentralisation
Change levers
Technology
• The term „Technology? does not refer to tools, equipment and machinery alone. It includes information, knowledge and expertise. • Faster and cheaper computers induced changes • New mobile communication devices also forced to change.
Change levers
Marketing
Contd…
• Customers are more quality and cost conscious. • More customization of products and services. • Demand more than mere delivery and aftersales service.
Strategy for Managing change
Do not Change Environment Don’t Change Company Change Environment
Avoid • ignore • hide
React • follow leader • reorganise
Influence • lobby • co-opt Anticipate • Strategic management
Change Company
59
Rules for Effective Change Management
• Work hard at establishing a sense of urgency • Form powerful coalition • Initiate change through informal discussion to get feedback and participation • Positively encourage objections • Listen actively • Plan and create short term gains • Institutionalise new approaches • Monitor the change and reinforce it
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Create Learning Organisations
• Learning organisation is one that has developed continuous capacity to adapt and change. • It uses double-loop learning – Errors are corrected by modifying existing organisational objectives, policies, standard routines and not merely on basis of past practices.
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Characteristics of Learning Organisations
• Shared vision • Creating new ways of solving problems
• A system of interrelationships
• Open communication
• Superiority of organisational interest
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International Perspective of Change management
• MNCs/ Companies with offshore clients • New Market Development Strategy • Effective change management requires
– Training and knowledge of host country?s culture to expatriate. – Rational compensation package. – A well defined repatriation plan
Conflict
• A process that begins when one party perceives that another party has negatively affected, or is about to negatively affect, something that the first party cares about. • New Strategy implementation may bring out many such concerns among different group of persons.
Conflict management
CONFLICT MANAGEMENT
Conflict Resolution Techniques
Conflict Stimulation Techniques
Conflict management
CONFLICT RESOLUTION TECHNIQUES • Problem Solving : Analytical; face to face discussion • Super ordinate goals: Creating a shared goal that cannot be attained without the cooperation of each conflicting parties • Expansion of resources: expansion of resources can create a win win situation • Avoidance: Withdrawal or suppression of conflict • Smoothing: Playing down the difference and highlight common interest between conflicting parties • Compromise: Each party to conflict give something of value • Authoritative command: Management uses formal authority to resolve conflict and then conveys their wishes to concerned parties.
Conflict management
CONFLICT STIMULATION TECHNIQUES
• •
•
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Communication: Using ambiguous or threatening messages Bringing in outsiders: adding employees to a group whose backgrounds values or styles differ from present members Restructuring the organization: realigning workgroup, altering roles, increasing inter dependence to disturb the status quo Appointing a devil’s advocate: designating a critique to purposely argue against the majority positions.
Conflict- handling Strategies
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