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 © 2003 South-Western College Publishing. All rights reserved. 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 © 2003 South-Western College Publishing. All rights reserved. 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 © 2003 South-Western College Publishing. All rights reserved. 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