Managing Human
Resources
Eighth edition
Jackson and Schuler
Chapter 4:
Creating Organizational Alignment
© 2003 South-Western College Publishing. All rights reserved.
Chapter Outline
 Strategic Importance of the Organization





Environment
Company Leadership: Vision, Mission, and
Values
Strategy
Organization Structure
Organizational Culture
Partnership Roles for Creating Organizational
Alignment
© 2003 South-Western College Publishing. All rights reserved.
4–2
Strategic Importance of
Organizational Environment
 Organizational environment includes:
 Company leadership
 Corporate and business strategies
 Organizational structure
 Organizational culture
 HR practices should be aligned with other
aspects of environment.
© 2003 South-Western College Publishing. All rights reserved.
4–3
Company Leadership
 Vision
 Top management’s view of the kind of company it
is trying to create.
 Mission
 Defines a company’s business and provides a clear
view of what the company is trying to accomplish
 Provides guidance to fulfill the vision.
© 2003 South-Western College Publishing. All rights reserved.
4–4
Leadership
 Values
 Are strong enduring beliefs and tenets
that the company holds dear.
 Differentiate the company from other
companies.
 State how employees are expected
to behave.
© 2003 South-Western College Publishing. All rights reserved.
4–5
Leadership (cont’d)
 The vision, mission, and values convey to
employees answers to questions such as:
 Where are we going?
 Why are we going?
 How will we get there?
 HR professionals participate in the creation,
maintenance and revision of vision, mission,
and values statements and develop practices
to support them.
© 2003 South-Western College Publishing. All rights reserved.
4–6
Examples of Vision Statements
“To become the world’s most respected service
brand.”
—American Express
“We want to be the world’s No. 1 hospitality
provider.”
—Ritz Carlton
© 2003 South-Western College Publishing. All rights reserved.
4–7
State Farm Insurance Mission Statement
At State Farm Insurance, the mission is to:
 Provide quality insurance products
 Offer friendly policyholder service
 Settle claims fairly and quickly
 Charge reasonable rates for our insurance products
 Maintain financial stability to fulfill our commitment to
our policyholders
 Uphold the State Farm marketing partnership
© 2003 South-Western College Publishing. All rights reserved.
4–8
State Farm Values Statement
 Providing customers with the best possible



service and value
Building lasting relationships among
customers, agents, employees and
communities through respect, understanding,
and mutual trust
Being financially strong
Keeping promises by always dealing fairly and
with integrity
© 2003 South-Western College Publishing. All rights reserved.
4–9
Strategy
 A set of integrated and coordinated

commitments and actions intended to achieve
a stated goal.
A guide for action that is closely linked to the
nature of the business.
© 2003 South-Western College Publishing. All rights reserved.
4–10
Levels of Strategy
 Corporate Diversification
 Business-Level Competitive
 Functional
© 2003 South-Western College Publishing. All rights reserved.
4–11
Developing a Competitive Strategy
Firms vary on how they approach strategy:
 Some strategies reflect the founder’s intuitions and
passions.
 Others are based on systematic analysis.
© 2003 South-Western College Publishing. All rights reserved.
4–12
Developing a Competitive Strategy
(cont’d)
 SWOT Analysis:
 Strengths
 Weaknesses
 Opportunities
 Threats
© 2003 South-Western College Publishing. All rights reserved.
4–13
Competitive Analysis
Five-Forces
Model
(Porter)
New Entrants
The Firm
Suppliers
Buyers
Existing
Rival Firms
Identifies Threats
And Opportunities
Substitute Products
© 2003 South-Western College Publishing. All rights reserved.
4–14
Questions to Ask About Competitors
 What drives the competitor?
 What is the competitor’s current strategy and


what strategy could it adopt?
What assumptions does the competitor make
about the industry?
What are the competitor’s capabilities?
© 2003 South-Western College Publishing. All rights reserved.
4–15
Competing for Labor
 Systematic use of competitive analysis for

understanding the competition for labor isn’t
widely used.
Benchmarking
 Identify “industry leaders”
 Analyze “best practices”
 Transfer best practices to own organization
 Usually a collaborative effort focusing on specific
HRM aspects
© 2003 South-Western College Publishing. All rights reserved.
4–16
Assessing Strengths and Weaknesses
Resources:
 Tangible assets
 Intangible assets
 Unique resources
Capabilities:
 Integration of
resources
Core Competencies:
 Unique knowledge
 Sustained competitive
advantage
© 2003 South-Western College Publishing. All rights reserved.
4–17
Aligning HRM for Organizational Learning
Organizational
Environment
for Learning
Organizations
•
•
•
•
Leadership
Strategy
Culture
Design and
Structure
Managing
Human
Resources to
Support
Continuous
Learning
• Staffing
• Training and
Development
• Performance
Appraisals
• Rewards
© 2003 South-Western College Publishing. All rights reserved.
Needed
Behaviors
Learning Orientation
and Capacity
• Think critically
• Create new
knowledge
• Learn from others
• Work across
boundaries
4–18
Four Types of Competitive Strategy
Desire for
Low Cost
Desire for
Something Unique
Broad
Target
Market
Cost Leadership
Strategy
Differentiation
Strategy
Narrow
Target
Market
Focused Cost
Leadership
Strategy
Focused
Differentiation
Strategy
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4–19
Behavioral Imperatives for
Alternative Strategies
Innovation
• Experimentation
• Risk Taking
• Project
Management
• Teamwork
Total Quality
• Responsiveness
to customers
• Problem Solving
• Quality
Standards
© 2003 South-Western College Publishing. All rights reserved.
Low Cost
• Efficient Production
• Lower Labor Costs:
• Part-time/shift work
• Repetitive work
• Minimum benefits
• Reengineering
4–20
What Does Quality Mean?
 In Products:
 Performance
 Features
 Reliability
 Conformance
 Durability
 Serviceability
 Aesthetics
 Perceived quality
© 2003 South-Western College Publishing. All rights reserved.
 In Services:
 Tangibles
 Reliability
 Responsiveness
 Assurance
 Empathy
 Insight
 Problem-solving
4–21
Organization Structure
 The allocation of tasks and responsibilities
among individuals and departments to support
the firm’s strategy.
 Departmental structure
 Divisional structure
 Matrix
 Process-based horizontal
 Network
© 2003 South-Western College Publishing. All rights reserved.
ABC, Inc.
4–22
Departmental Structure
 Characteristics:
 Based on functions: marketing, production, and
other activities
 Focused on specialized knowledge
 Maintaining coordination may be difficult as firm
grows.
 Provides clear paths for
advancement
© 2003 South-Western College Publishing. All rights reserved.
4–23
Divisional Structure
 Characteristics:
 Based on product lines, customer markets or
geographical locations
 Encourages cross-functional work
 Creates duplication of support functions
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4–24
Matrix Structure
 Characteristics:
 Dual reporting to functional and divisional heads;
lines of authority may be ambiguous
 Employees are shared across organizational units
 Facilitates organizational learning
© 2003 South-Western College Publishing. All rights reserved.
4–25
Process-Based Horizontal Structure
 Characteristics:
 Flat hierarchical structure
 Use of teams
 Quick and continuous improvement
 Broad skill development
 Fits Total Quality Management (TQM) and process
reengineering approaches
© 2003 South-Western College Publishing. All rights reserved.
4–26
Organization Design
 Organizational Processes:
 Total Quality Management
 Baldrige Award
 ISO 9000 Standards
 Employee Empowerment
 Process Reengineering:
 New ways to get work done
 Examine breadth and depth of change
© 2003 South-Western College Publishing. All rights reserved.
4–27
Network Structure
 Characteristics:
 Many outsourced activities
 Uses information technology for coordination
 Facilitates constant change and adaptation
 Challenge to manage and control
© 2003 South-Western College Publishing. All rights reserved.
4–28
Structures That Cross Country Borders
 International Structure
 Separate group responsible for international
activity
 Global Product Structure
 Expand by offering new products/services
 Global Regions Structure
 Group activities by similar economies, cultures
 Transnational Structure
 Matrix structure based on products & regions
 Manage teams across borders
© 2003 South-Western College Publishing. All rights reserved.
4–29
Coordinating with Global Teams
 Facilitate coordination among product/regional

units
Members may be from same or different
departments.
 Formal, informal, same or multi-level groups
 May include people from other companies
 HR information management systems
improve coordination and consistency
© 2003 South-Western College Publishing. All rights reserved.
4–30
Organizational Culture
 The unique pattern of shared
 assumptions,
 values
 norms
that shape the
 socialization activities
 language, symbols
 rites and ceremonies
of people in the organization.
© 2003 South-Western College Publishing. All rights reserved.
4–31
Organizational Culture (cont’d)
Flexible
Formal
Control
Orientation
Clan
Culture:
Entrepreneurial
Culture:
Tradition, loyalty,
commitment, teamwork, socialization
Risk-taking,
creativity, dynamism
Bureaucratic
Culture:
Market
Culture:
Formalization, rules,
procedures,
hierarchy
Financial goals,
competitiveness,
profits orientation
Stable
Internal
External
Focus of Attention
© 2003 South-Western College Publishing. All rights reserved.
4–32
Organizational Subcultures
 May arise from differences among:
 Firms that merge
 Demographic groups
 Occupational groups
 National and regional groups
 Industries
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4–33
Hofstede’s Dimensions of
Industry Culture




Employee-oriented versus results-oriented
Parochial versus professional
Open versus closed
Loose control versus tight control
© 2003 South-Western College Publishing. All rights reserved.
4–34
Strategic Importance of Culture
 Strong Cultures
 Provide clear guidelines for behavior
 Can enhance performance when they match
strategic objectives
 Must be in sync with
stakeholder expectations
© 2003 South-Western College Publishing. All rights reserved.
4–35
Partnership Roles for Creating Alignment
Line Managers:
• Build Culture
• Understand
structure
• Develop an
empowered
workplace
• Ensure
internal
alignment
HR Professionals:
• Align HR with
vision mission
and values
• Support
organizational
culture
• Work with line
managers to
support strategy
• Monitor
alignment
© 2003 South-Western College Publishing. All rights reserved.
Employees:
• Contribute to
mission
• Adapt to culture
• Develop skills to
support strategy
• Keep
organizational
goals in mind
• Assist in job
redesign
• Monitor own
needs
4–36