MGT-555
PERFORMANCE AND CAREER
MANAGEMENT
LECTURE NO - 8
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RECAP
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Course Objective
Key Learning Outcomes
Contents of the Course Structure
We have discussed HRM and Strategic HRM(SHRM) in
previous lectures, which included following points;
1. Definitions
2. Functions of HRM and SHRM
3. Types of assistance provided by HRD.
4. Challenges faced by Human resource managers.
5. Relationship between Human resource department
and other departments.
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RECAP
• 6. Role of Human resource managers in future.
• 7. Effect of HRM on organizational
performance.
• 8. Role of HRM in training and development of
employees.
• 9. Role of HRM in Performance and career
management.
• 10. Role of HRM in maintaining competitive
pay practices.
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RECAP
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Understanding Performance management
Definitions
Case study - PM Systems
Case Study - Morgan Stanley
Contribution / Advantages of PM System
Performance Management Process
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RECAP
• Performance management Process
– Components of PMP
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Performance Execution
Performance Assessment
Performance review
Performance renewal and Re-contracting
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RECAP
• Performance Management Role in Strategic
planning
• Purpose of strategic planning
• Why strategic planning- need
• Process of linking performance management
to the strategic planning
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Agenda of Today’s Lecture
• Successful strategic plans
• Environmental Analysis
• External factors – Environmental Analysis
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Successful Strategic plan
There are several steps that must be
considered in creation of a successful strategic
plan. These include;
1. The conduct of environmental analysis(i.e.,
the identification of external and internal
parameters of environment in which the
organization operates)
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Successful Strategic plan (Contd.)
2. The creation of organizational mission(i.e.,
the statement of what the organization is all
about)
3. The creation of 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 short term,say, one to three
years)
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Successful Strategic plan (Contd.)
5. The creation of strategies that will allow the
organization to fulfill its mission and vision to
achieve its goals(i.e., description of game
plans or how to reach the stated objectives)
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Successful Strategic plan (Contd.)
After each of these issue has bee defined,
organizational strategies are created so that
the mission and vision are fulfilled and the
stated goals are met.
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Successful Strategic plan (Contd.)
• 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 conduct the environmental
analysis may follow to help define the mission
and vision more clearly.
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Successful Strategic plan (Contd.)
• In other words, the mission and vision may be
drafted first and the environmental analysis
second.
• The important point is that there is a
consistent interplay among these issues.
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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.
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Environmental analysis (Contd.)
• 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 the decision can be made against the
backdrop of a broader context.
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Environmental analysis (Contd.)
• Everyday our market is changing the way it is.
Many new things are developed and in a
matter of about some seconds, the whole
scenario stands different in front of us. Among
them, there are many things that we can
control and then there are other things that
fall beyond our control and those are called
systematic factors.
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Environmental analysis (Contd.)
• Systematic things happen in
the environment we live in, the environment
that surrounds us and many times they greatly
influence us.
• Businesses are also influenced by the
environment that they’re in and all the
situational factors that determine
circumstances from day to day.
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Environmental analysis (Contd.)
• It is because of this, that businesses need to
keep a check and constantly analyze the
environment within which they run their trade
and within which the market lays.
• A detailed analysis of the macro-environment
or the external environment as a whole is
called PESTLE analysis, which precisely means
a bird’s eye view of the PESTLE analysis
business conduct.
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Environmental analysis (Contd.)
• The PESTLE analysis ascertains for the
managers and the strategy builders as to
where their market currently stands and
where it will head off in the future.
• P for Political factors: These factors take into
account the political situation of a country and
the world in relation to the country.
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Environmental analysis (Contd.)
• For example, what sort of government
leadership is affecting what decisions of a
country? All the policies, all the taxes laws and
every tariff that a government levies over a
trade falls under this category of factors.
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Environmental analysis (Contd.)
• E for Economic factors: Economic factors include
all the determinants of an economy and its
condition. The inflation rate, the interest rates,
the monetary or fiscal policies, the foreign
exchange rates that affect imports and exports,
all these determine the direction in which an
economy might move, therefore businesses
analyze this factor based on their environment so
as to build strategies that fall in line with all the
changes that are about to occur.
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Environmental analysis (Contd.)
• S for Social factors: Every country is different
and every country has a unique mindset.
These mindsets cast an impact on the
businesses and the sales of their products and
services; therefore PESTLE analysis includes
these factors as well. The cultural implications,
the gender and connected demographics, the
social lifestyles, the domestic structures; all of
these are studied by companies to understand
the market and the consumer better.
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Environmental analysis (Contd.)
• T for Technological factors: Technology greatly
influence a business, therefore PESTLE
analysis is conducted upon these factors too.
Technology changes every minute and
therefore companies need to stay connected
along the way and integrate as and when
needed. Also, these factors are analyzed to
understand how the consumers react to
technological trends and how they utilize
them for their benefit.
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Environmental analysis (Contd.)
• L for Legal factors: Legislative changes occur
from time to time and many of them affect
the business environment. For example, if a
regulatory body would set up a regulation for
the industries, then that law would impact all
the industries and business that strive in that
economy, therefore businesses also analyze
the legal developments happening in their
environment.
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Environmental analysis (Contd.)
• E for Environmental factors: The location of
countries influence on the trades that businesses
do. Adding to that, many climatic changes alter
the trade of industries and the way consumers
react towards a certain offering that is launched
in the market. The environmental factors include
geographical location, the climate, weather and
other such factors that are not just limited to
climatic conditions. These in particular affect the
agri-businesses, farming sectors etc.
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Environmental analysis (Contd.)
• An examination of external environment also
includes a consideration of opportunities and
threats.
• Opportunities are characteristics of the
environment that can help the organization
succeed.(e.g. markets not currently being
served, untapped labor pools, new
technology).
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Environmental analysis (Contd.)
• On the other hand threats are characteristics
of external environment that can prevent the
organization from being successful.
• Examples;
– Economic recession
– Innovative products of competitors
• CASE EXAMPLE—Air Asia
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Environmental analysis (Contd.)
Consider the case of Air Asia, which is currently the
one of the largest jet carrier in Malaysia with an
average of 250 daily departures and arrivals. Air Asia
is an affordable low cost fare airline which provides
service to 85 cities locally and internationally. Air
Asia commenced operations in 1993 given two key
opportunities in the external environment. First, a
major competing airline engaged in a dramatic
downsizing, leading to service gaps in various major
markets that Air Asia filled. Secong the Air Port size
increased significantly.
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Environmental analysis (Contd.)
Recently , Malaysian Airline, the largest carrier
operating in Malaysia, made changes in the
environment that may have had a direct impact on
Air Asia's strategic plan: Malaysian Airline launched
its own low-fare affiliate. The new affiliate is going
toe-to-toe with Air Asia. So, what had been an
opportunity for Air Asia may no longer remain one,
given the launching of Malaysian low cost AirLine.
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EA – External Factors
The following is a non exhaustive list of external
factors that should be considered in any
environmental analysis
• Economics:
– For example is there an economic recession on
the horizon? Or, is the current economic recession
likely to end in the near future? How would these
economic trends affect our business?
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EA – External Factors (Contd.)
• Political/legal:
– For example, how will political changes
domestically or in the international markets we
are planning on entering affect our entry strategy?
• Social:
– For example, what is the impact of an aging
workforce on our organization?
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EA – External Factors (Contd.)
• Technological:
– For example, what technological changes are
anticipated in our industry and how will these
changes affect how we do business?
• Competitors:
– For example, how do the strategies and product of
our competitors affect our own strategies and
products? Can we anticipate our competitors next
move?
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EA – External Factors (Contd.)
• Customers:
– For example, what do our customers want now,
and what will they want in the next five years or
so? Can we anticipate such needs?
• Suppliers:
– For example, what is the relationship with our
suppliers now and is it likely to change, and in
what way, in the near future?
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Summary of Today’s Lecture
CHAPTER 3
• Performance Management and Strategic planning
• Purpose of strategic planning
• Why strategic planning- need
• Process of linking performance management to
the strategic planning
• Successful strategic plans
• Environmental Analysis
• External factors – Environmental Analysis
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Thanks
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