Prentice Hall, Inc. © 200610-1 STRATEGIC MANAGEMENT & BUSINESS POLICY 10 TH EDITION THOMAS L....

Prentice Hall, Inc. © 2006 10-1

STRATEGIC MANAGEMENT & BUSINESS POLICY10TH EDITION

THOMAS L. WHEELEN J. DAVID HUNGER

CHAPTER 10 Strategy Implementation: Staffing & Directing


Staffing & Directing

Success is ;

well – executed strategy implementation



Staffing –

Hiring new people with new skills; firing people w/ inappropriate skills; training existing employees to learn new skills

Leading –

Specifying clear performance objectives and promoting team-oriented corporate culture



Staffing follows strategy –Having formulated a new strategy, a corporation may find that it needs to either hire different people or retrain and develop current employees to implement new strategy

–It is known that; Training & Development results in :

•Higher productivity•Reduction in waste•Overall cost savings



A study in UK found that 71% of leading companies rated staff learning and training as important compared to 62% of the other companies

Another study in US revealed that corporations with training programs had 19% higher productivity than those without such programs

Motorola estimates that every $1 it spends on training delivers $30 in productivity gains within three years



It is possible that a current CEO may not be appropriate to implement a new strategy.

Matching manager to strategy

Executives with a particular mix of skills and experiences may be classified as an EXECUTIVE TYPE and paired with a specific corporate strategy



Staffing follows strategy –Executive type

•Dynamic industry expert•Analytical portfolio manager•Cautious profit planner•Turnaround specialist•Professional liquidator



Executive Types –•Dynamic industry expertA corporation following a concentration strategy emphasizing vertical or horizontal growth would probably want an aggressive new CEO with a great deal of experience in that particular industry

•Analytical portfolio managerA diversification strategy might call for someone with an analytical mind who is highly knowledgeable in other industries and can manage diverse product lines



•Cautious profit plannerA corporation choosing to follow a stability strategy would probably want its CEO as a cautious profit planner

•Turnaround specialistsWeak companies in a relatively attractive industry tend to turn to a type of challenge-oriented executive

•Professional liquidatorIf a company cannot be saved, a professional liquidator might be called on by a bankruptcy court to close the firm and liquidate its assets



Executive Succession (it is an eventuality)

Insiders vs Outsiders

Selection & Management Development



On the other hand; firms in trouble overwhelmingly choose outsiders to lead them. Boards realize that the best way to force a change in strategy is to hire a new CEO who has no connections to the current strategy.

Companies who uses relay executive succession (insiders), have significantly higher performance than those that hire an outsider

Prosperous firms tend to look outside for CEO candidates only if they have no obvious internal candidates. Hiring an outsider to be a CEO is a risky gamble.



Selection & Management Development –

Identifying Abilities and Potential•Performance appraisal system•Assessment centers•Job rotation

Recent studies are suggesting that female executives score higher than man on motivating others, fostering communication, producing high-quality work, and listening to others,

while there is no difference between them in strategic planning or analyzing issues



Retrenchment strategy–

–Downsizing (sometimes called rightsizing)

•Eliminate unnecessary work•Contract out work for cost savings (outsource)

•Plan for long-run efficiencies•Communicate reasons for action•Invest in remaining employees•Develop value-added jobs (cancel outsourcing)

But ;



Problems in Downsizing –

•What is the distinction between cutting the fat or cutting the muscle. A study of downsizing automobile related US companies revealed that at 20 out of 30 companies, either the wrong jobs were eliminated or blanket offers of early retirement prompted very valuable managers to leave.

•Downsizing can seriously damage the learning capacity of organizations and creativity drops significantly.

•Cost conscious executives tend to defer maintenance, skimp on training, delay new product introductions and avoid risky new businesses – all of which leads to lower sales and eventually to lower profits.

•A situation can develop in which retrenchment feeds on itself and acts further weaken instead of strengthen the company.



Problems in Downsizing –

Successful downsizing firms undertake a strategic reorientation, not just a bloodletting of employees.

Research shows that; when companies use downsizing as part of a larger restructuring program to narrow company focus,

they enjoy better performance



International issues in staffing

If a corporation is to extend its operations to another country, it should hire and promote people from;

-Country of origin, (problems of culture and bureaucracy)

-Host country, (sub optimization)

-International orientation regardless of their country of origin or host country assignment.



Managing Corporate Culture-A company is a culture (Weick)

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

-There is no best corporate culture. An optimal culture is one that best supports the mission and strategy of the company of which it is a part.

-Unless strategy is in complete agreement with the culture, any significant change in strategy should be followed by a modification of the organization’s culture.

-Although corporate culture can be changed, it may often take a long time, and it requires much effort.



Assessing “Strategy – Culture” Compatibility

Managing Corporate Culture

Communication is key to the effective management of change

Rationale for strategic changes should be communicated to workers not only in newsletters and speeches but also in training and development programs



Managing Diverse Cultures–

–Integration–Assimilation–Separation–Deculturation


Action Plan Example



Management By Objectives –

Goal-Setting TheoryProposes that setting goals that are accepted, specific, and challenging yet achievable will result in higher performance than having no or easy goals.

Benefits of Participation in Goal-Setting•Increases the acceptance of goals.

•Fosters commitment to difficult, public goals.

•Provides for self-feedback (internal locus of control) that guides behavior and motivates performance (self-efficacy).


Management by Objectives

Setting GoalsSetting Goals

Planning ActionPlanning Action

Implementing PlansImplementing Plans

Reviewing PerformanceReviewing Performance

1

2

3

4



Management By Objectives –

–Establish objectives–Setting individual objectives–Action plan–Periodic performance review



Total Quality Management (TQM) :

An operational philosophy committed to -- customer satisfaction and

-- continuous improvement.

–Better, less variable quality –Quicker, less variable response in processes–Greater flexibility in adjusting to customer’s shifting requirements–Lower cost and elimination of non-value-adding jobs

According to TQM, faulty processes, not poorly motivated employees, are the cause of defects in quality.



Total Quality Management (TQM)

TQM emphasizes prevention, not correcting.

Inspection for quality still takes place, but the emphasis is on improving the process to prevent errors and deficiencies.



Total Quality Management (TQM) –

TQM INVOLVES A SIGNIFICANT CHANGE IN CORPORATE CULTURE

–Intense focus on customer satisfaction–Internal as well as external customers–Accurate measurement–continuous improvement–Trust and teamwork



International considerations in Leading –HOFSTEDE - GLOBE

–Power distance (PD)–Uncertainty avoidance (UA)–Individualism-collectivism (I-C)–Masculinity-femininity (M-F)–Long-term orientation (LT)



International considerations in Leading –

–Power distance (PD)Malaysia and Mexico scored highest, Germany and Austria scored lowest. People in countries scoring high on this dimension tend to prefer autocratic to more participative management.

MBO, originated from USA, succeeded in Germany, because the idea of replacing the arbitrary authority of the boss with the impersonal authority of mutually agreed-upon objectives fits the lower power distance.




–Uncertainty avoidance (UA)

Switzerland and Japan scored highest on disliking ambiguity, whereas USA and Singapore scored lowest. People in nations scoring high tend to want career stability, formal rules, clear cut measures of performance, communication should be clear and explicit, based on facts, meetings should be planned in advance and have clear agendas.

In contrast in Greece and Russia, people are not used to structured communication and prefer more open-ended meetings.




–Individualism-collectivism (I-C)

USA and Canada scored highest, Mexico and Guatemala scored lowest. People in nations scoring high tend to value individual success through competition, whereas people scoring low tend to value group success through collective cooperation.




–Masculinity-femininity (M-F)It is the extent to which society is oriented toward money and things (masculine) or toward people (feminine). Japan an Mexico scored highest (on masculinity therefore lowest on femininity), France and Sweden scored lowest (on masculinity therefore highest on femininity)

People in nations scoring high tend to value clearly defined sex roles where men dominate and to emphasize performance and independence, whereas people scoring low tend to value equality of the sexes where power is shared and to emphasize the quality of life and interdependence

Prentice Hall, Inc. © 200610-1 STRATEGIC MANAGEMENT & BUSINESS POLICY 10 TH EDITION THOMAS L....

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Transcript of Prentice Hall, Inc. © 200610-1 STRATEGIC MANAGEMENT & BUSINESS POLICY 10 TH EDITION THOMAS L....