MIE330 Chapter Two

opportunities of downsizing

- allows company to get ride of dead wood and make way for fresh ideas - often a unique opportunity to change an organization's culture - can force more positive relations - can demonstrate to top management decision makers the value of the company's human resources to its ultimate success

two-way linkage

- allows for consideration of human resource issues during the strategy formulation process

integrative linkage

- dynamic and multifaceted, basing on continuing rather than sequential interaction - HRM executive is an integral member of the senior management team - HRM functions built into the strategy formulation and implementation process

one-way linkage

- firm's strategic business planning function develops the strategic plan and then informs the HRM function of the plan - often leads to strategic plans that the company cannot successfully implement

administrative linkage

- lowest level of integration - HRM function's attention is focused on day-to-day activities - HRM executive has no time or opportunity to take a strategic outlook toward HRM issues - strategic business planning function exists without any input from the HRM department - HRM completely divorced from strategic management process

learning organizations

required to be in a constant state of learning through monitoring the environment, assimilating information, making decisions, and flexibly restructuring to compete in that environment; have a competitive advantage

SWOT analysis

strengths, weaknesses, opportunities, threats; external analysis and internal analysis combined

Companies that are "steady state" tend to have evaluation systems that call for

subjective performance assessments of managers

HRM is primarily responsible for which three of the five implementation variables

task, people, reward systems

vertical alignment

the HR practices and processes are aimed at addressing the strategic needs of the business

development

the acquisition of knowledge, skills, and behaviors that improve an employee's ability to meet changes in job requirements and in client and customer demands

Executives who have extensive knowledge of the behaviors that lead to effective performance use performance management systems that focus on

the behaviors of their subordinate managers

a high level of pay relative to that of competitors can ensure that

the company attracts high quality workers

fixed costs

the costs that are incurred regardless of the number of units produced e.g., rent, depreciation, utilities, property taxes

contribution margins

the difference between what you charge for your product and the variable costs of that product; contribute to your ability to cover your fixed costs

the six "menus" of HRM function

the different functional areas of HRM job analysis/design, recruitment/selection, training and development, performance management, pay structure/incentives/benefits, and labor-employee relations

legacy workforce

the former workers to whom the firm still owes financial obligations

performance management

the means through which managers ensure that employees' activities and outputs are congruent with the organization's goals

strategic choice

the organization's strategy; the ways an organization will attempt to fulfill its mission and achieve its long-term goals

downsizing

the planned elimination of large numbers of personnel, designed to enhance organizational effectiveness

selection

the process by which an organization attempts to identify applicants with the necessary knowledge, skills, abilities, and other characteristics that will help it achieve its goals

strategy formulation

the process of deciding on a strategic direction by defining a company's mission and goals, its external opportunities and threats, and its internal strengths and weaknesses

job design

the process of defining the way work will be performed and the tasks that will be required in a given job

strategy implementation

the process of devising structures and allocating resources to enact the strategy a company has chosen

internal analysis

the process of examining an organization's strengths and weaknesses focuses on the quantity and quality of resources available to the organization--financial, capital, technological, and HR

job analysis

the process of getting detailed information about jobs

recruitment

the process of seeking applicants for potential employment

intended strategies

the result of the rational decision-making process used by top managers as they develop a strategic plan

emergent strategies

the strategies that evolve from the grassroots of the organization and can be thought of as what organizations actually do, as opposed to what they intend to do

gross margin

the total amount of margin you made; number of units sold x contribution margin

How does the HRM function implement strategy?

through administering HRM practices: job analysis/design, recruitment, selection systems, training and development programs, performance management systems, reward systems, and labor relations programs

A firm's strategic management decision-making process usually takes place at its ________ level.

top

goals

what an organization hopes to achieve in the medium- to long-term future; they reflect how the mission will be operationalized usually to maximize stockholder wealth

strategies to create a competitive advantage come in two basic forms:

1) overall cost-leadership: producing the lowest cost products or services 2) differentiation strategy: creating the perception that products or services are different from others in the industry

the link between strategy and HR practices is primarily through:

people

SHRM process model

*see diagram and memorize

challenges of downsizing

- HRM function must surgically reduce the workforce by cutting only the less valuable worker - boosting morale of employees who remain after the reduction

concentration strategy

a strategy focusing on increasing market share, reducing costs, or creating and maintaining a market niche for products and services appraisals more behavioral

mission

a statement of the organization's reason for being; usually specifies the customers served, the needs satisfied and/or the values received by the customers, and the technology used often accompanied by a statement of a company's vision and/or values

Porter discusses five forces that shape strategy:

1. Rivalry among existing competitors; 2. Threat of new entrants; 3. Bargaining power of suppliers; 4. Threat of substitute products or services; 5. Bargaining power of buyers

five major components of the strategic management process relevant to strategy formulation

1. external analysis 2. mission 3. goals 4. internal analysis 5. strategic choice

five important variables to determine success in strategy implementation

1. organizational structure 2. task design 3. the selection, training, and development of people 4. reward systems 5. types of information and information systems

two-way linkage steps

1. strategic planning team informs the HRM function of the various strategies the company is considering 2. HRM executives analyze the HR implications of the various strategies, presenting the results of this analysis to the strategic planning team 3. after strategic decision has been made, the strategic plan is passed on to the HRM executive, who develops programs to implement it

business model

a story of how the firm will create value for customers and, more important, how it will do so profitably

strategic management

a process to address the organization's competitive challenges by integrating goals, policies, and action sequences into a cohesive whole

internal growth strategy

a focus on new market and product development, innovation, and joint ventures appraisals combination of behaviors and results

the pay systems role in implementing strategies

a high level of pay and/or benefits relative to that of competitors can ensure that the company attracts and retains high-quality employees, but this might have a negative impact on the company's overall labor costs by tying pay to performance, the company can elicit specific activities and levels of performance from employees

strategic human resource management (SHRM)

a pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals

training

a planned effort to facilitate the learning of job-related knowledge, skills, and behavior by employees

four levels of integration that exist between the HRM function and the strategic management function

administrative linkage, one-way linkage, two-way linkage, and integrative linkage

external growth strategy

an emphasis on acquiring vendors and suppliers or buying businesses that allow a company to expand into new markets

role behaviors

behaviors that are required of an individual in his or her role as a job holder in a social work environment

four possible categories of directional strategies

concentration strategies, internal growth strategy, external growth strategy, and divestment or downsizing strategy

variable costs

costs that vary directly with the units produced

generic strategy types

describe the consistent way the company attempts to position itself relative to competitors

overall cost leadership strategy

provides above-average returns within an industry, and tends to bar other firms' entry into the industry because the firm can lower its prices below competitors' costs

Diversified companies are more likely to use ___________ measures of performance to evaluate managers because

quantitative; because top managers have less knowledge about how work should be performed by those below them in the hierarchy

During the strategic implementation stage of the strategic management process, an organization

ensures it has skilled employees in place

external analysis

examining the organization's operating environment to identify strategic opportunities and threats opportunities examples: customer markets that are not being served, technological advances that can aid the company, and labor pools that have not been tapped threats examples: potential labor shortages, new competitors entering the market, pending legislation that might adversely affect the company, and competitors' technological innovations

companies engaged in a cost strategy require employees to ________; they promote and develop _______

have a high concern from quantity and a short term focus, to be comfortable with stability, and to be risk averse; repetitive behaviors performed autonomously promote internally and develop internally consistent pay systems with high pay differentials between superiors and subordinates

companies engaged in differentiation strategy need to have employees that are

highly creative and cooperative; only have a moderate concern for quantity, a long term focus, and a tolerance for ambiguity; risk takers

differentiation strategy

if successful, above average returns, and differentiation may protect it from price sensitivity

the role of HR in competitive advantage should continue to ______________ because of the fast-paced change characterizing today's business environment

increase

When executives are unclear about the specific behaviors that lead to effective performance, they tend to focus on evaluating the _______ of their subordinates.

objective performance results