Strategy

Strategic management - HR's ROLE

- Scanning and sensing changes n the outside environment - Building bridges with internal/external stakeholders - Developing appropriate strategic responses.

Cash Flow Statement

Illustrates the effect of all organizational activities that both consume value and produce value - on how much cash or cash equivalents the organization has on hand. Shows how money us flowing into and out of the organization - through *operations, investing and financing* - over a defined period of time Financial data for the ash flow statement comes from the income statement and the balance sheet.

Vision Statement

Inspire and Motivate. IMAGE A vivid guiding image of the organization's desired future - the future it hopes to attain through its strategy. The ultimate picture of what leadership envisions for the organization, The key to a solid vision is that it conjures up a similar picture for each member of the organization.

Balance Sheet

One indicator of an organization's financial health. A statement of the origination's financial position - its assets, liabilities, and equity - at a particular time. Assets and liabilities are balanced. Assets = Liabilities + Equity OR Equity = Assets - Liabilities

S.M.A.R.T.

Specific Measurable Attainable Relevant Time-bound

"HR's Role in the M&A Strategy

"An important HR role in the planning and execution of organizational strategy is in the due diligence process. Due diligence refers to an intensive investigation of all factors surrounding a business decision to ensure that all risks are understood and that a risk management strategy is developed, accepted, and implemented. The concept of due diligence has been applied throughout this Learning System. Whenever an HR activity involves uncertainty—in developing a functional strategy or hiring an individual employee—due diligence should be included. HR's performance of due diligence is critical to organizational strategy development because it may uncover obstacles that will affect agreements or implementation plans. For example, if a strategy involves a merger or acquisition, due diligence involves identifying: Structural issues, such as the arrangement of reporting relationships, titles, the design of how the organizations interact with customers/clients, and the relationships with vendors. Technological considerations, such as direct product/service provisions; mechanisms for communication and data tracking; the use, type, and impact of each organization's enterprise management tools; and the ability for integration of the technology. Financial considerations, such as the compensation structure, union contracts, obligations to a union pension fund, stock options, "incentive plans, and the full range of benefits administration. Legal issues, such as reporting requirements that differ by jurisdiction or type of business, legal constraints on the closing of facilities or elimination of redundant personnel, and benefit and nonbenefit issues (e.g., severance and tax codes). Because of its critical nature, the M&A due diligence investigation should use multiple sources and industry and local contacts and experts. Throughout the M&A process, the job of HR is to maintain focus on the "people" dimension while it conducts HR due diligence, plans the M&A HR integration strategy, implements, and monitors and evaluates "Planning the HR Integration Strategy Since one of the characteristics of a successful integration is the speed with which it is accomplished, HR should develop a post-M&A strategy for integrating HR staff and processes as soon as the strategic goals for the M&A and the information from the due diligence are available. In digesting the results of the due diligence, HR can begin to map and compare the two organizations' structures and processes and decide how to manage differences." "Implementing Since post-M&A integration generally means streamlining the workforce and reconciling multiple compensation systems, HR focuses on: Communicating honestly and quickly, before incorrect rumors spread and take hold. Making required changes quickly—where this is possible. Part of the due diligence process is identifying restrictions on implementation, such as laws affecting acquired rights (existing obligations of merged or acquired entities), workforce terminations, and job reassignments. Supporting efforts to blend or revise work processes—perhaps by using cross-cultural task forces. Providing training in new jobs and processes. HR also ensures that stakeholders—such as vendors or supply chain "partners and affected communities—are included in both planning and implementation. Monitoring and Evaluating In the period after the merger, HR monitors for signs of problems and responds appropriately. It implements various initiatives, such as communicating mission and values, to build cohesion. It begins the process of analyzing its strategy and evaluating its success, with an eye toward identifying best practices for future M&As

Communication strategy

"Communicating Strategy In a 2008 Harvard Business Review article, Gary Neilson, Karla Martin, and Elizabeth Powers noted that "execution is the result of thousands of decisions made every day by employees acting according to the information they have and their self-interest." Based on a global survey of over a thousand organizations of different types, the authors list five elements needed for effective implementation of strategy: Communication outward to the entire team. Leaders must communicate a clear sense of actions individuals must take and the decisions they are empowered to make. A strategy may require "reorganization to support this. Communication inward to leaders. Communication works best as a loop. Leaders need to know what's working and what isn't, but they also need rapid sharing of competitive information from the field. Changes in the external environment may require adjustments to strategy. Leadership support of decisions made by subordinates, rather than second guessing. Free flow of information across organizational boundaries, which can support collaboration. Enough information to allow team members to connect their work to the strategy. Field managers and employees must be able to connect strategic goals with daily decisions and effort. Knowing the strategic relevance of work is empowering and motivating. Strategy can be communicated in different ways and at different levels—through formal communication to the entire function, department or team meetings, and individual performance management meetings. As stated above, the communication plan should include ongoing opportunities for feedback. Managing Implementation of the Strategy Each component of the organizational and HR strategies must be implemented with an eye on the agreed metrics for success. Being mindful of the need for evaluation, HR professionals plan for ways to "capture measurement data as an output during the implementation phase. As discussed in the section on the Business Acumen competency in the HR Competencies module, these metrics should consider effectiveness (the degree to which targets are met), efficiency (the way in which the allocated resources are used), and impact (the effect of this successful initiative on the organization's overall strategic goals). Specific measures will include both activities performed and results produced. Management skills and knowledge include: Planning and allocating use of resources (people, time, equipment, money). Making sure that HR team members have the necessary skill sets and tools. Providing leadership by communicating the value of contributions, keeping the group focused on goals, and modeling organizational values. Clearing away obstacles to progress. This requires quickly identifying performance issues (such as conflicts, performance gaps, inadequate supervision, inadequate resources, morale problems) and taking steps to correct them and navigate the team back onto the right course and into smoother waters. Managing internal and external stakeholders. This involves making sure that expectations are understood, realistic, and agreed and checking in periodically to make sure that stakeholders are satisfied or if their needs have changed. Monitoring and controlling progress.

"Impact of Business Strategies on HR Strategy"

"Corporate Strategy: Where We Will Compete According to Robert Grant, corporate strategy "defines the scope of the firm in terms of the industries and markets in which it competes." The decisions here often center on growth and integration, although sometimes the strategy will involve shrinking and shedding parts to refocus on a core business." "Growth Strategy Options The choice of a growth strategy will be made after thorough analysis of the comparative returns on investment, the risks involved, and the ability to satisfy strategic goals. (Note that growth is not a strategy, but a strategic goal. When we use the term "growth strategy" here, we mean the way in which an organization intends to grow.)" "Each strategy requires different levels of investment and offers different levels of control and return. Building an operation from the ground up (a greenfield operation) will require more time and probably more resources than finding and contracting with a local manufacturer. Similarly, acquiring a firm outright will give an organization more control over strategy and sole benefit of profits, but a strategic alliance will deliver more resources than the organization can invest alone and improve chances for success. HR will be involved to varying degrees in developing and implementing the chosen strategy. The implications of some of these growth strategies are discussed in the Talent Acquisition and Retention Functional Area in the People module. Impact of Corporate Strategies on HR Strategy The level of HR's involvement in corporate strategies will vary. Involvement in merger/acquisition and divestiture is very extensive; it is discussed separately later in this section. A greenfield operation will "involve risk analysis, staffing, working with local authorities, and implementing HR policies and procedures in the new operations. If the new operation is in a different country, the policies and procedures may have to be adjusted to meet local laws, business practices, and local culture. Even in strategies that require little integration with the organization, such as franchising or contract manufacturing, HR may be involved in the organization's ethical obligations to audit workplace practices." "In The Global Challenge, Paul Evans, Vladimir Pucik, and Ingmar Björkman note that HR plays an important role in strategic alliances and joint ventures: Evaluating partners' HRM capabilities and cultural fit. HR can assess whether a partner's HR function can contribute to the alliance's or venture's strategic goals. For example," "does the partner have the capability to recruit and train necessary staff? Can the partners agree on key HR issues, such as performance evaluation and rewards? Will differences in organizational culture interfere with communication and performance management? In some instances, those in which one partner hopes to learn from the other, a lack of cultural fit may not be a problem. Negotiating the relationship. HR may help select and train the negotiation team and contribute its own facilitation skills. It must also address HR-related issues, such as transfer of competencies, and ensure that the partner is developing the appropriate staff and workforce. Negotiating the relationship may be particularly challenging in a joint venture when issues of operational control, board membership, and senior management appointments must be decided. Implementing alliances/joint ventures. This may involve contributing to compensation/reward plans and development programs and developing mutually agreed staffing plans. Staff may come from each of the partners, and, to avoid conflict, they must bring similar levels of competence to the alliance/joint venture. Will transferred staff be dedicated or on temporary assignment? Partners must agree how to manage each other's employees. Trust must be developed.

Developing strategies

"Developing Strategies That Fit During the second phase of the strategic planning process, the organization considers where it wants to go and what it knows about itself and its environment, and then it develops options for how to get there. The options themselves must be analyzed to determine their potential for delivering the desired performance, the associated risks, and their requirements. The outcome of this phase is a strategy or set of strategies that have "fit." "Robert Grant in Contemporary Strategy Analysis defines strategic fit as the consonance or compatibility of an organization's strategy with its external and internal environments, especially with regard to the goals and values it chooses and the resources and capabilities that can be deployed toward strategic goals. Michael Porter would add that when strategic fit exists, an organization's activities are consistent with the strategy, they interact with and reinforce each other, and they are "optimized" to reach the strategic goal. "Optimized" means that the organization will do whatever it needs to get there. Strategies vary greatly but are similar in one aspect. Each organization's strategy must describe: How an organization can create what Michael Porter calls a strategic position, a position in which it enjoys a competitive edge over its rivals. Robert Grant calls this an organization's business strategy. Where an organization will compete in terms of markets and industries. This is called the corporate strategy. It defines the scope of the organization." "Business Strategy: How We Will Compete Business strategy addresses the way in which the enterprise will relate to its industry and marketplace—how it will define its particular value to its customers. Creating Competitive Advantage There are two ways an organization can create competitive advantage, and both involve change. The first involves change in the external environment: in customer demand, prices, or technology. The second involves change inside the organization itself. If there is only stasis—in the industry or market or in the organization—there is no opportunity. Generally, these industries become commodity markets. External changes can create competitive advantage for organizations that can react swiftly to the changes." "Internal changes refer to an organization's ability to create change, to innovate. The innovation may be technological, but it may also be the discovery of an unmet customer need, an entirely new way to appeal to customers, or the creation of new processes or business models—for example, a model that relies heavily on integration of the supply chain parts. Changes of these sorts are often capable of resurrecting an industry or enterprise in the decline phase of industry or organizational evolution (as discussed in the previous chapter). Blue ocean strategies are an extreme example of creating competitive advantage through innovation. In these strategies, enterprises create a completely new arena, often within an existing industry. The originators of the term, W. Chan Kim and Renée Mauborgne, describe blue oceans as "the unknown market untainted by competition. They have no competitors for awhile.

Evaluating Strategic Results

"Evaluation of strategic results is essential for several reasons: Measuring the outcomes of those activities is sound strategic management, since limited resources must be directed to activities that deliver the most strategic impact. Measurement is also a matter of good governance, of demonstrating to stakeholders that managers are doing a good job in using resources. Analyzing results allows organizations to improve their strategies and continually increase their institutional knowledge and skills. Although evaluation always appears as the final phase of strategic management, it is, as we have seen, a factor in the preceding stages. During strategy formulation, goals and strategically aligned objectives are set, specific key performance indicators are identified, and appropriate metrics selected. During strategy implementation, tools and processes are created to collect data related to the key performance objectives. Measurement tools may include holistic performance scorecards, score sheets for quantifiable metrics, spreadsheets comparing planned to actual outcomes, observation guides, and narratives. HR team members must be coached to perform their data-gathering responsibilities faithfully and accurately. They should understand not only how to use the measurement tools and processes but also why they are being used—the benefits that evaluation creates "Communicating Strategic Results The key challenge, as with any communication, is to use information efficiently and effectively to make a point. Data analysis is too often presented as a series of bulleted slides or through pages of spreadsheets. This is a challenge since the sheer quantity of data may overwhelm most audiences, especially senior managers. A better strategy is to approach the task of communicating the results of analyzing data as a narrative that will be supported by data. The data does not drive the report. Let's say an HR manager wants to deliver an interim progress report on one of HR's strategic objectives, to increase diversity among managers in the organization's 12 branch locations. HR has amassed considerable historical data for the organization and individual branches, conducted surveys, examined the effects of different tools, implemented a program, and performed a preliminary evaluation. Figure 18 outlines how the manager might use this data to create a clear narrative for decision makers.

HR role in divestiture strategies

"Growth strategies are often fueled by the selective "pruning" of parts of the organization that are underperforming or that are no longer in line with the organization's strategy. The divestiture strategy offers a number of benefits to the parent company: The perceived value of a subsidiary or its opportunities may be increased. Sometimes the parent company may not have the necessary talent to take the "child company" to its next level of growth. Investment may be recouped through the sale of a high-value subsidiary and the cash used to increase the parent's value in other ways. The enterprise's activities may be refocused on new priorities, perhaps as the result of competitive threats and/or opportunities. Risk that might derive from financial positions (such as poor cash flows or high debt load) or strategic outlooks (such as declining market growth or the possibility of a hostile takeover) can be managed. "The general steps for divestiture include: Identify the candidate for divestiture. The candidate might be a valuable but strategically unaligned business, or it might be a subsidiary competing in a market with low growth potential or competing ineffectively in the market. HR plays a role in this stage by performing due diligence as a seller: identifying potential risks connected with divesting particular candidates—for example, loss of talent, impact on employee career development opportunities or on labor contracts. HR can also participate in a SWOT analysis of the candidate. Identify a target buyer. The strongest candidate will be an enterprise that needs the strengths and opportunities the divested subsidiary can provide and that can address potential weaknesses in the workforce. Some parent companies want to be sure that employees will thrive in the new company. HR can provide accurate information about the value of the workforce and can work on behalf of the employees to obtain favorable compensation and development opportunities. Restructure. Even before an actual sale or spin-off, the parent company should prepare the subsidiary for its new identity by defining new leadership, board composition, and organizational structure. This will increase the value and potential of the carved "out or spun-off subsidiary. Again, HR plays an important role here. It may help identify and prepare strong leaders for the subsidiary (without harming the talent of the parent company). Leaders may be drawn from other parts of a global organization. HR will also be involved in designing incentive offers for the subsidiary's new leaders. Execute the deal. Transition service agreements are often established to support the new entity. Agreements might cover financial (treasury and tax), legal, IT, business processes, and HR—including such capabilities as HRIS, payroll, and benefits. HR can assemble a balanced transition team, composed of parent and subsidiary employees, to empower departing employees without ceding control over sensitive decisions. Throughout this process HR can help capture what the organization has learned from its decisions and actions, analyze the experiences, and communicate useful lessons for future divestiture activities."

Sustaining Competitive Advantage

"Hide your success. Some companies will remain private so that they do not have to report their performance. Others may keep their profits low enough to deter new entrants into the market "niche. Make it as difficult as possible for others to compete. This may be through reacting swiftly and strongly to competitive actions, such as engaging in a price war or litigation related to patents that will cause poorly capitalized competitors to fail. Companies may also "eat" all the available capital by offering terms that are difficult to match or contracting for all major suppliers. Getting into a market first can also guarantee access to a larger share of market, which will take some time to erode. Make it hard to replicate what you do. In these cases there are many strands to the strategy, and it is difficult to discern which are most critical to success. Is it lower prices or the merchandising approach—or logistics and supply chain management or simply better performance? Porter's Competitive Strategies" "Cost Leadership Firms that pursue a strategy of cost leadership aim at capturing market share within their industry by virtue of lowest price. There are many paths to cost leadership. Charles Schwab built a "no frills" investment firm by using technology—computerized order processing. IKEA accomplishes it through careful product design, transferring some activities to customers, and working closely with its suppliers. Firms commit to: Creating economies of scale, by which cost decreases with every increase in output. Sharing knowledge and information so that workers acquire necessary skills and critical tasks are completed more quickly. Redesigning processes to root out actions that do not produce value, create delays and expense, or are duplicative. Designing products and services that can be replicated easily. Lowering operating costs (e.g., investing in energy efficiencies, using cheaper labor, locating near markets to lower transportation costs). Adjusting capacity to demand quickly (e.g., being able to shift work to different centers of production or idle lines of production without financial consequences). Creating a supportive workforce—effective managers and motivated workers." "Differentiation Firms that pursue a strategy of differentiation from competition aim for being able to charge a higher price and therefore create more value by offering something different or by offering the same thing in a different way from other competitors in their industry or market. For example, parts designed as components for several manufacturers' products do not have as much potential for differentiation as designer eyeglass frames, which create value through association with well-known designers. A grocery store may follow a strategy of higher prices but offer better quality and more exotic produce, an array of prepared foods, and a pleasant shopping environment with opportunities for tasting. Some businesses may focus on speed of delivery, ability to fabricate to customers' specifications, "one-stop shopping" or the ability to meet all of a customer's needs, convenient locations, or reliability. Porter noted that to fulfill differentiation strategies, firms need to be good at product design and performance, product and customer support, marketing, merchandising, integration, and quality. Focus Focus strategies apply cost leadership or differentiation within narrow industry segments or niches.

Implementing and evaluating of strategy

"Implementation and Evaluation of Strategy During the implementation phase of strategy, strategic intent is translated into specific plans of action, usually at the functional and cross-functional levels. The success of the organizational and functional strategies rests on allocating resources to the right initiatives, communicating them to the HR organization, and managing the action plans effectively. Evaluation must be based on agreed metrics and communicated to the organization." Allocating Resources "The HR budget can be viewed as having two parts: an operational budget that funds ongoing activities and a strategic budget that funds projects that are aligned with the organization's strategic goals. The operational side of the HR budget includes resources that are directly related to staffing and expenses required to provide HR services to internal customers. This budget ordinarily includes resources related to: Talent acquisition. Training and development. Compensation and benefits. Employee and labor relations "Health, safety, and security. IT. Planning. Philanthropy. Many of these expenses are variable and will also be affected by the organization's and HR's strategies. For example, growth and retraction strategies will affect employee head count and may involve additional expenses for recruiting or outplacement services. A strategy that requires a change in organizational structure or culture will probably require funding for consultants and development activities. Therefore, the first thing HR leaders must do in the process of allocating resources to strategic activities is to compare previous and current activities and allocations with activities that will be needed to support the proposed organizational strategy. What has changed? Head count? Workforce skill profile? Geographical presence? The need for budget retrenchment and cuts to services and activities? How will these changes affect HR's business plan for the coming years? Having several years of HR data to establish estimating rules of thumb and trends in expenses will be helpful. Strategic activities are often budgeted and managed as projects. They must compete for available organizational resources since plans will be funded according to strategic priority. This requires establishing a line of sight from strategic goals to HR project objectives. As strategy is translated to functional level. "Prioritizing Investments Two well-known portfolio management tools to assist in prioritizing investments were developed by consulting firms for large corporations. HR professionals can use these tools to help them align their budgets (e.g., for compensation, rewards, programs) to produce the most impact on their strategic objectives. The tools can also be used to analyze human capital portfolios—relating workforce areas of weakness and strength to strategic needs so that investment in development can be targeted for the most effect. Growth Share Matrix" "The quadrants are formed by two axes: the rate of growth in this market and the size of share an entity holds. For HR, market share might represent the organization's desired results and market growth rate might indicate need. From an HR perspective: Stars are highly productive or value-generating employees, programs, or processes. They are necessary to the organization's strategy and future success. They should be retained and merit further investment. Dogs produce little results and satisfy few needs. They are prime candidates for divestiture. These might be employee programs with sagging participation numbers and poor employee reviews." "Question marks are perplexing. They are not producing the desired results although the need persists and may be increasing. For example, the organization may need to improve its diversity but the strategies it has used are producing few results. HR professionals must ask themselves, "Why is this happening? Can it be fixed? Will the cost of fixing it offset the revenue that can be produced?" Cash cows have done and continue to do well, but their market is mature and their growth potential is limited. For example, a particular group of jobs may have been valuable to the organization in the past but will be increasingly less important in the future as a result of changes in technology. The compensation strategy may be designed to redirect some resources from this area to attract, develop, or retain "stars" or fix "question marks." Nine-Box Matrix The prioritization matrix shown in Figure 16 is sometimes referred to as the GE-McKinsey matrix. The nine-box matrix is often used when HR professionals must direct scarce resources to workforce management. Attractiveness of industry can be read as future potential, while ability to compete can indicate competency levels."

Making a business case

"Making a Business Case A business case is a presentation to management that establishes that a specific problem exists and argues that the proposed solution is the best way to solve the problem in terms of time, cost efficiency, and probability of success. The form and level of formality of the business case will vary by organization. Some are written proposals with supporting financial analyses, while others may be slide-supported oral presentations. Whether they are written or oral, business cases generally have the same components. These components are described below and illustrated with a description of a possible HR business case "Statement of need. This is the condition or change impelling the function's action. Example: HR is aware that the organization's strategy includes growing its South American businesses. Until now, these businesses have operated independently from headquarters and from each other. The lack of common policies and processes for compensation and rewards and talent management and the lack of a shared organizational culture would inhibit the strategy. Recommended solution. The objectives for an ideal solution are defined (the desirable outcomes of such an initiative), and the proposed action is described in sufficient detail to show how it meets these objectives. In some cases, alternatives may be described as well, and the reasons why they are not being recommended may be discussed. Example: HR proposes conducting a customized salary and benefits survey for the targeted growth areas and the current countries in the portfolio and building a policy and practice "culture" for the existing individually run countries that would make acquiring a partner or growing organically more feasible. Risks and opportunities. Risks should include outcomes that could decrease the project's chance for success, outcomes that could present new opportunities that would require action, and the risks of doing nothing at all "Estimated costs and time frame. The project budget should include all foreseeable elements (labor, equipment, fees, travel, and so on) plus a reserve for the unforeseeable based on the project's risk. The time frame should keep in mind not only the project requirements but also the organization's needs. Longer or more complex projects may be structured in phases, with gates or review milestones at which management can decide whether to proceed or not

Strategic management - CRITICAL SUCCESS FACTORS

*Alignment of Effort - Strategic alignment is necessary to maintain organizational focus in a defined mission and goals. Each unit must examine its plan against the organization's. Each time the organization's strategy must be adjusted, the organization must be mindful of the logic behind the original plan and the value of the original goal. *Control of Drift* - Strategic drift happens when and organization keeps doing what it used to do, perhaps making incremental changes, until it is no longer n track toward its desired goal. *Focus on Core Competencies* - Focus efforts on where those competencies can be outsourced to reliable suppliers. Ensure alignment f competencies with the changing environment, Moving from now competency to another requires changes in perspective, knowledge and technical skills. *Systems Thinking* - The organization must be seen as composed of interrelated parts, Making change in one area to achieve strategic goals will most likely require changes in other areas. *Structure as a Strategic Lever* - Magnifies the results of an organization's efforts. Identifying misalignments of the structure with strategic activity and offering solutions t redesign structures or support channels for ross-functional or interdivisional collaboration.

Strategic management - FOUR PHASES

*Phase 1: FORMULATION* - Strategists gather and analyze internal and external information to determine the organization's current positions and capabilities, opportunities, and constraints. The outcome of formulation of the organization as a while is set of strategic statements that describe the organization's mission, vision, goals, and values. *Phase 2: DEVELOPMENT* - Organizational strategies are selected - how and where it will compete. Based on these strategies, business units and functions, including HR, will develop their own strategies and examine their own readiness to implement the organizational and functional strategies. *Phased 3: IMPLEMENTATION* - Strategies ar translated into specific action plans and resources are allocated by strategic priority. Specific performance objectives are established for use during the final phase of evaluation. Goals and objectives are established. *Phase 4: EVALUATION* - Performance data is analyzed agains agreed metric. The success f the strategic initiatives is reported to management who may opt to persist with, adjust, or shift the strategic plan. Initiates are usually evaluated continually, nit at the end of the strategic planning period.

PEST Analysis

*Political* *Economic* *Social* *Technological* - Assemble a list of possible events or trends that exist now or could materialize within a defined time frame. - Identify the potential impacts on the organization - Research the impacts more thoroughly to understand possible causes, their dimensions, and connections with other events or trends. - Assess their importance baed in the strength of the data.

SWOT Analysis

*Strengths* (internal) *Weaknesses* (internal) *Opportunities* (external) *Threats* (external)

Environmental scanning

A process that involves a systematic survey and integration of relevant data to identify external opportunities and threats and to assess how these factors affect the organization currently and h9w they are likely to affect the organization in the future. Provides the external data that will be needed to complete the SWOT analysis. *Purpose* 1. Lessent the randomness of information flowing into the organization. 2. Provide early awnings for managers of changing external conditions.

Strategy

Aa long-range plan of action oriented for achieving defined goals. It is developed to achieve organization-level goals, he organization's components (divisions and functions) develop their own strategies for the role they will play in achieving the organization's strategic goals. The alignment of HR strategy with the organization's strategy ensures that programs in talent acquisition, rewards, EE engagement, training and development, diversity, and corporate social responsibility help move the organization closer to its goals.

Value drivers

Actions, processes, or results that are needed to deliver desired value.

Net Profit Margin

Calculated by dividing net pretax income by net sales. An important indicator for an organization because it represents efficiency, productivity, and competitive success. Net Income + Net Sales = Net Profit Margin

Gross Profit Margin

Compares gross profit with sales. Gross Profit + Net Sales = Gross Profit Margin

Benchmarking

Compares performance levels and or processes f one entity with those of another to identify performance gaps and set goals aimed at improving performance. May be internal or external. Helps make sure an organization is not simply measuring performance but improving it, Encourages growth by focusing the organization's attention outside itself and its current practices. Steps: - Defining KPIs - Measuring current performance - Identifying appropriate benchmarks and securing their performance data. - Identifying performance gaps between oneself and the benchmark organization. - Setting objectives and implementing any necessary support activities.

Income Statement

Compares revenues, expenses, and profits over a specified period of tie - usually a year or a quarter. Provides a "bottom line" look at how the organization is performing Revenue - Expenses = Net Income

Lagging indicator

Describes effects that have already occurred and cannot be changed.

Organizational culture

Edgar Schein: "The basic assumptions and beliefs that are shared by members of an organization that operate unconsciously and define na basic 'take for granted' fashion an organization's views of itself and its environment."

Strategic management

Involves positioning the organization for the future deciding where and what the organization will be in the future and making the decision in the present that this future requires.

Leading indicator

Predictive in that action in this area can change future performance and help achieve success.

Mission Statement

Purpose. ACTION Specifies what activity the organization intends to pursue and what cure management has charted for the future - very concise statement of its strategy. It names its major stakeholders and the value it intend to deliver to them It communicates a see of purpose to all of the organization's stakeholders. the language of the statement often expresses a sense of priorities.

Balanced scorecard

Robert Kaplan and David Norton. Approach to identify key performance indicators (KPIs) and to make sure that the objectives used to measure performance are strategically aligned to the various sources of value to the organization and are balanced. KPIs: *Finance* *Customers* *Internal business processes* *Learning and growth*

Balance sheet

Summarize the financial position at a given moment in time and change as each transaction is recorded. Every financial transaction is an exchange, and both sides of the transaction are entered n the balance sheet to reflect assets, liabilities, or equity. ONLY transactions measurable in money are recorded.

Strategic Focus - Organization Life Cycle

The way in which organizations, industries, and products grow, reach a high-point, and then gradually diminish.

Liabilities

What an organization owes.

Assets

What an organization owns - tangible or intangible (copyright)

Equity

What is left of a company's assets after is liabilities have been discharged.