The Functions of Modern Management

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MGT601: The Functions of Modern Management week 4 assignment

In a four- to five-page paper (excluding the title and references pages), discuss the relationship between human resource planning activities and the organization’s strategic development and implementation. Describe the eight elements of the staffing process. Examine the relationship between the eight elements of the staffing process and the four activities related to human resource planning.

Based on the information presented in Figure 10.5, review the human resource planning process and the previous readings from Chapters 4 and 8. Explain the relationship between the four activities of human resource planning and the organization’s strategic planning, development, and implementation.

Your paper should include in-text citations and references for at least three scholarly sources, in addition to the text, and be formatted according to APA style as outlined in the Ashford Writing Center.

Carefully review the Grading Rubric for the criteria that will be used to evaluate your assignment.

FIGURE 10.5 Human resource planning process

(Plunkett 330-331)
Plunkett, Warren R., Gemmy Allen, Raymond Attner. Management. Cengage Learning, 01/2012. VitalBook file.

CHAPTER 4 PLANNING AND STRATEGY

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1 Explain the importance of planning

2 Differentiate between strategic, tactical, operational, and contingency plans

3 List and explain the steps in a basic planning process

4 Discuss various ways to make plans effective

5 Distinguish between strategic planning, strategic management, strategy formulation, and strategy implementation

6 Explain the steps involved in the strategic planning process

7 Explain the formulation of corporate-level strategy, business-level strategy, and functional-level strategy

SELF-MANAGEMENT

Strategic Thinking

What do you want to accomplish with your life? To be successful, you need to be proactive, look ahead, anticipate change, and analyze opportunities. In other words, you need to plan and think strategically. This will help you to determine the potential impact of your actions on other individuals. As a result you will make better decisions.

Strategic thinking involves the gathering and use of data to make significant long-term decisions that will affect future business performance. This process requires examination of the mission, core functions and current performance of a business, the industry in which it operates, and the external environment. An important step in becoming a manager is to think strategically. For each of the following statements, circle the number which indicates your level of agreement. Rate your agreement as it is, not what you think it should be. Objectivity will enable you to determine your management skill strengths and weaknesses.

Compute your score by adding the circled numbers. The highest score is 50; the lowest score is 10. A higher score implies you are more likely to be confident about your ability to think strategically. A lower score implies a lesser degree of readiness, but it can be increased. Reading and studying this chapter will help improve your understanding of strategy.

→ Do you feel confident about your ability to set goals? Do you analyze opportunities and problems from a broad perspective? Do you understand an action’s potential impact on others? If not, where do you want to improve?

Assessment adapted from Harvard ManageMentor, “Strategic Thinking Self-Assessment,” 2005.

INTRODUCTION

This chapter begins our examination of the planning function with a self assessment. After arriving at definitions of planning and planning terminology, we examine the types of plans that managers create, the process used to create plans, barriers to planning, and techniques commonly used to make planning effective. Our examination extends by analyzing the processes and techniques involved in long-term planning for both an organization and its various subsystems. Through strategic planning, managers, their organizations, and the autonomous units or divisions of the organization identify and evaluate how they intend to effectively compete in their markets.

PLANNING DEFINED

1 Explain the importance of planning

Planning is preparing for tomorrow, today. It provides direction and a unity of purpose for organizations and their subsystems. During planning, managers have five key responsibilities:

1. Construct, review and/or rewrite their organization’s mission.

2. Identify and analyze their opportunities.

3. Establish the goals they wish to achieve.

4. Identify, analyze, and select the course or courses of action required to reach their goals.

5. Determine resources they will need to achieve their goals.1

planning

Preparing for tomorrow, today

Vision, Mission, and Core Values

Changing an organization in any significant way is a primary responsibility of top management. Every CEO must sense the need for a change, create a clear statement as to where the organization wants to be in the future (its vision), sell that vision to organizational members, create plans to achieve it, commit organizational resources to the effort, lead the effort by removing obstacles, and make certain that the organization’s progress is monitored. Managers require more vision than ever because change is coming faster than ever. Leaders have the ability to make their vision real by engaging the minds, as well as the hearts, of others.

vision

A clear statement on where an organization wants to be in the future

An organization’s mission explains its purpose—its primary reason(s) for existence. It affects how every employee and process will operate. When a mission is formalized in writing and communicated to all organizational members, it becomes the organization’s mission statement. This is the touchstone by which all offerings are judged. America’s largest software company, Microsoft, began in 1975 with a one-sentence mission statement: “A computer on every desk and in every home.” This mission is interesting because Microsoft makes software, not computers. In addition, in 1975, almost no one had a personal computer at work, much less at home.

mission

A clear, concise, written declaration of an organization’s central and common purpose; its reason for existence

mission statement

A formalized, written mission communicated to all organizational members

The most effective mission statements are easily recalled and provide direction and motivation for the organization. “The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.” Notice the emphasis on quality—meeting customer needs—in this statement.

Since an organization exists to accomplish something in the larger environment, its specific mission or purpose provides employees with a shared sense of opportunity, direction, significance, and achievement. An explicit mission guides employees to work independently and yet collectively toward the realization of the organization’s potential. Thus, a good mission statement gets the emotional bonding and commitment needed. It allows the individual employee to say, “I know how I should do my job differently.”

For example, many people might think that The Walt Disney Company’s mission is to run theme parks. But Disney’s mission is always moving toward an expanded view, one of providing entertainment. Also, many people might think that Revlon’s mission is to make cosmetics. Yet, Revlon provides glamour and excitement. Charles Revson, Revlon’s founder, understood the importance of mission. He is rumored to have said “In the factory, we make cosmetics; in the store, we sell hope.”

While creating a mission statement, management expert Peter Drucker stated that two questions must be answered: What is our business? What should it be?2 These questions must be raised and answered periodically, not just when forming a business. The answer to the first question is determined in part by the customers an organization currently serves. Meeting their demands and needs has made the organization what it is. The answer to the second question is determined, in part, by the customers that an organization wishes to serve. The specific needs of identified customers, along with the firm’s experience and expertise, will dictate what products and services it creates and/or sells, what processes it uses, and what their levels of quality will be.

Once Drucker’s two questions are answered, the existing mission statement must be confirmed as valid or rewritten. The challenge for management is to transform the organization’s concepts and principles into something that anchors everything it does. Keep in mind that the leadership challenge for top management is to create a mission that captures the commitment of organizational members.3

A mission statement usually includes references to an organization’s core values and serves as an operational and ethical guide. A company’s core values are the fundamental principles it will not compromise. One core value any organization should embrace is the continual search for quality and productivity improvement.

core values

Values that should never change; “bedrock principles”

Values serve as a baseline for actions and decision making and guide employees in the organization’s intentions and interests. The values driving behavior define the organizational culture. Patagonia, a small California-based sportswear maker, has at its core a deep respect for the individual. Patagonia experienced rapid growth, which brought with it a loss of the sense of family that its owner had worked so hard to create. After significant soul-searching, its employees agreed to reduce the size of the company and refuse any new business that would harm this core value. The decision fostered greater loyalty among Patagonia’s employees.

A strong value system or clearly defined culture turns beliefs into standards such as best quality, best performance, most reliable, most durable, safest, fastest, best value for the money, least expensive, most prestigious, best designed or styled, and easiest to use. If asked, “What do we believe in?” or “List our organization’s values,” all employees in the organization should write down the same values. For example, McDonald’s values are captured in its operating philosophy of “QSC&V,” which stands for quality, service, cleanliness, and value.

When companies do not ask Drucker’s two basic questions regularly or answer them in a less-than-satisfactory manner, they usually experience rather costly results. For example, before filing one of the biggest-ever corporate bankruptcy cases, Enron had admirable value statements, which included, “We treat others as we would like to be treated ourselves.” And, “We work with customers and prospects openly, honestly, and sincerely.” In reality, Enron kept hundreds of millions of dollars in debt off the company’s books in partnerships that were paying millions of dollars in fees to the Enron executives who ran them. Obviously, these values meant little to the company’s top managers.

Goals

Goals may be long term or short term. Long-term goals require more than one year to achieve. Southwest Airlines’ managers began planning by studying the company’s mission statement and determining its expertise. They assessed Southwest’s strengths and market opportunities. Only then did they establish the long-term goal of frequent, low-cost flights. This goal capitalized on Southwest’s experience, expertise, and reputation with existing customers.

Short-term goals can be reached within one year, and many are directly connected to long-term goals. Southwest had several such goals, including expanding service by adding routes in the U.S. and internationally. They’ve earned a title no other airline in the industry can claim: The only short-haul, low-fare, high-frequency, point-to-point carrier in America. Figure 4.1 defines the characteristics that make goals effective.

Plans

A plan—the end result of the planning effort—commits individuals, departments, entire organizations, and the resources of each to specific courses of action for days, months, and years into the future. It provides specific answers to six basic questions in regard to any intended activity—what, when, where, who, how, and how much.

plan

The end result of the planning effort; commits individuals, departments, entire organizations, and the resources of each to specific courses of action for days, months, and years into the future

FIGURE 4.1 Characteristics of effective goals and strategies

• What identifies the specific goals to be accomplished.

• When answers a question of timing: each long-term goal may have a series of short-term objectives that must be achieved before the long-term goal can be reached.

• Where concerns the place or places where the plan will be executed.

• Who identifies specific people who will perform specific tasks essential to a plan’s implementation.

• How involves the specific actions to be taken to reach the goals.

• How much is concerned with the expenditure of resources needed to reach the goals—both short- and long-term.

In setting goals, more businesses are “junking business-as-usual incremental objectives—moving a few grains of sand—and striving instead to hit gigantic, seemingly unreachable milestones called stretch targets.”4 On one hand, top managers are recognizing that achieving incremental improvements invites middleand lower-level managers as well as workers to perform the same comfortable process a little bit better each year. However, even the best-maintained equipment can become obsolete.

On the other hand, stretch goals (dubbed “Big Hairy Audacious Goals” or BHAGS [pronounced bee-hags] by management analyst James Collins) require great leaps forward on such measures as product development time, return on investment, sales growth, quality improvement, and reduction of manufacturing cycle times.5 Walter Todd, the head of operations for PepsiCo UK and Ireland as well as the vice president of sustainability for the company’s European operations, explains PepsiCo’s use of BHAGS.

stretch goals

Goal that requires great leaps forward on such measures as product development time, return on investment, sales growth, quality improvement, and reduction of manufacturing cycle times

One of the ways that we have triggered innovation is by setting big hairy audacious goals. This forces us to look at every area of our operations and encourages ideas to bubble up. We want to engage people about what a future possibility would look like. If you come up with a commitment, say to reduce energy by 3% next year, you will not get people engaged or any real financial engagement. But if you set an engaging vision, you can get a coalition of people excited by the possibilities. 6

Strategies and Tactics

A course of action created to achieve a long-term goal is called a strategy. Strategies may exist for an entire organization or for its autonomous units or functional areas. A course of action designed to achieve a short-term goal—an objective—is called a tactic. Mission defines strategy. Objectives must be achieved in order to reach a long-term goal. Therefore, strategies influence and often dictate the choice of tactics.

strategy

A course of action created to achieve a long-term goal

tactic

A course of action designed to achieve a short-term goal; an objective

At Southwest Airlines, creating and successfully managing the company’s growth required achieving a sequential set of objectives through a variety of tactics. A strong management team had to be built. People had to be recruited and hired to facilitate the logistics and daily operations of a successful airline. Money had to be raised to finance related activities. New customers had to be adequately served.

One additional example illustrates the connection between a strategy and tactics. An individual seeking a two- or four-year college degree has a strategy (and a goal) that requires two or more years to complete. The strategy requires a sequence of tactics that, semester after semester, will yield the short-term goals—successful completion of courses in their proper sequences—that ultimately lead to the achievement of the strategic goal—a college degree.

Determining Resource Requirements

The best-made plans will not be executed if they lack the resources required. Most plans need various resources, including people, money, facilities, equipment, supplies, and information. Among other things, companies need technology to accomplish their plans. An investment in technology can improve business processes and give companies a competitive advantage.

TYPES OF PLANS

2 Differentiate between strategic, tactical, operational, and contingency plans

For an organization to accomplish its goals at all organizational levels—top, middle, and first-line—it must develop three types of mission-based plans: strategic, tactical, and operational (as shown in Figure 4.2). Each must work in harmony with the others if the organization’s mission and long-term goals are to become reality.

FIGURE 4.2 The relationship between goals, objectives, and plans in organizational planning

Valuing Diversity

Planning for Diversity at Accenture

Accenture—a global management consulting, technology services, and outsourcing company—moved women’s issues onto the company’s global agenda. As part of Accenture’s commitment to building a diverse workforce, the company participates in International Women’s Day, which honors the economic, political, and social achievements of women. The company’s Global Women’s Initiative offers programs such as mentoring and networking opportunities to ensure that Accenture’s women continue to succeed.

Working Mother magazine has named Accenture to its annual list of “100 Best Companies for Working Mothers” for years. In 2009, the magazine featured a topic “What We Love” for each company on the list. For Accenture, the magazine ‘loved’ several things, including the following.

A deeply entrenched women’s interests group with 27 chapters boasts more than 5,000 members (nearly half of all female employees), while the national women’s networking group offers a rotating slate of monthly events, including mentoring meet-andgreets, skill-refining seminars and power breakfasts for newly hired or promoted executives.

Accenture integrates its diversity initiative with its strategic planning. The company uses International Women’s Day to celebrate with employees, while increasing awareness of women’s initiatives. Employees have the opportunity to connect and learn from one another.

Like any business goal, there must be quantifiable measures to gauge the progress toward achieving it. Accenture uses geographic scorecards, global surveys, and performance appraisals to ensure that management remains accountable for the initiative’s success. Women at Accenture have advanced since the inception of the initiative. The percentage of female promotions and female “partners,” or senior-level executives, has increased.

→ Diversity includes the full range of talents, skills and experiences in a set of individuals. How does Accenture benefit from diversity?

Sources: Accenture, “Accenture International Women’s Day 2010,” March 2, 2010, http://www.accenture.com/Countries/Singapore/About_Accenture/Business_Events/Women-Day-2010.htm; “Working Mother 100 Best Companies 2009,” Working Mother, http://www.workingmother.com/BestCompanies/work-life-balance/2009/08/accenture.

Strategic Plans

A strategic plan contains the answers to who, what, when, where, how, and how much for achieving strategic goals—long-term, company-wide goals established by top management. Strategic goals focus on the changes desired in such areas as productivity, product innovation, and responsibilities to stakeholders.7 Accenture has made valuing the diversity of its employees a strategic goal and—as this chapter’s Valuing Diversity feature points out—a duty for all its managers. The strategic plan is concerned with the entire organization’s direction and purpose—how it intends to grow, compete, and meet its customers’ needs—over the next few years.

strategic plan

Contains the answers to who, what, when, where, how, and how much for achieving strategic goals; long-term, companywide goals established by top management

Strategic planning draws heavily on the leadership abilities of managers. A manager’s business philosophy should include three key ingredients: (1) define your mission, (2) execute, and (3) “Treat people as you would want to be treated.” Regardless of whether a company is large or small, leaders are required to see—have a vision—of where the company needs to go and to design the fabric of actions—organize, staff, lead, and control—so the future becomes a reality.

Just how far into the future a strategic plan will stretch is determined by the degree of certainty that managers have about the external environmental conditions and the availability of needed resources. Every strategic plan deals with many hard-to-predict but important future events in external environments: Will there be a recession? Will inflation continue at its current rates? How will local, state, and federal regulations change? What will the competition do? Answers to these questions are difficult to predict over a one-year period, let alone a five-year span. For this reason strategic plans must be regularly reviewed and adjusted for changes that occur in their time frame. They must be viewed as works in progress.

Just as one person’s ceiling can be another person’s floor, the completion of one manager’s plan marks the beginning of planning efforts by another. Top management’s strategic plan becomes the foundation for middle-level managers’ planning efforts that produce tactical plans. Figure 4.3 illustrates how tactical and then operational objectives evolve from strategic goals.

Tactical Plans

Developed by middle managers, a tactical plan is concerned with what each of the major organizational subsystems must do, how they must do it, when things must be done, where activities will be performed, what resources are to be utilized, and who will have the authority needed to perform each task. Tactical plans are more detailed, have shorter time frames and narrower scopes than strategic plans; they usually span one year or less.

tactical plan

Developed by middle managers, this plan has more details, shorter time frames, and narrower scopes than a strategic plan; it usually spans one year or less

Strategic and tactical plans are usually but not always related. Every strategy requires a series of tactical and operational plans linked to each other to achieve strategic goals; middle managers, however, do create plans to reach what are uniquely departmental, divisional, or team goals, both for the short and long term. All tactical plans are related to reaching the company’s strategic goals. Two such plans might involve the following:

• To reduce fourth quarter unit costs without sacrificing the quality of customer service

• To consolidate retail stores from nine to six in five months

FIGURE 4.3 An organization’s mission and level of goals

Following logically from the strategic goals are tactical objectives: short-term goals set by middle managers that must be achieved in order to reach top management’s strategic goals and the short- and long-term goals of middle managers. Once a company devises the tactical plan, it probably forms teams and assigns team members specific duties.

Operational Plans

An operational plan is developed by first-line managers—supervisors, team leaders, and team facilitators—in support of tactical plans. The operational plan is the first-line manager’s tool for executing daily, weekly, and monthly activities. Operational plans fall into two major categories: single-use and standing plans.

operational plan

The first-line manager’s tool for executing daily, weekly, and monthly activities. Operational plans fall into two major categories: single-use and standing plans

A one-time activity—an activity that does not recur—requires a single-use plan. Once the activity is completed, the plan is no longer needed. Two examples of single-use plans are programs and budgets. A program is a single-use plan for an operation from its beginning to its end. An example would be to gain influential reviews for a company’s new line of computers. Once the reviews were obtained, the plan would cease to be of value. In addition, an example would be a program to handle a company’s participation in an industry trade show, where it could meet the head buyers for the computer retailers.

program

A single-use plan for an operation from its beginning to its end

Another single-use plan is a budget. It is a plan that predicts sources and amounts of income that will be available over a fixed period of time and how those funds will be used. Most companies need several budgets, for example, one for total annual operations, another to back efforts to hire new personnel, and another to launch new routes. Budgets prepared at various levels help to control spending in an organization and in its autonomous subsystems. When the specified period for a budget ends, it becomes a historical document and often proves useful for future budgeting efforts.

budget

A single-use plan that predicts sources and amounts of income that will be available over a fixed period of time and how those funds will be used

Unlike budgets and programs, a standing plan specifies how to handle continuing or recurring activities, such as hiring, granting credit, and maintaining equipment. Once constructed, a standing plan continues to be useful over many years but is subject to periodic review and revision. Examples of standing plans include policies, procedures, and rules.

A policy is a broad guide for organizational members to follow when dealing with important and recurring areas of decision making. They set limits and provide boundaries for decision makers. Policies are usually general statements about the ways in which managers and others should attempt to handle their routine responsibilities. Figure 4.4 presents a policy governing hiring and other human resource decisions that was created to conform to federal antidiscrimination guidelines issued by the Equal Employment Opportunity Commission. Policies are not prescriptive. They state a viewpoint the company wants its managers to adopt when conducting ongoing operations. Policies can sometimes be controversial and create ethical issues, as this chapter’s Ethical Management feature points out.

policy

A broad guide for organizational members to follow when dealing with important and recurring areas of decision making. They set limits and provide boundaries for decision makers

Ethical Management

Privacy at Work: Company Policy and the Law

Are workers entitled to privacy? Although some companies have clearly told their employees about monitoring and have received their consent as a condition for being hired, others have not done so. Privacy advocates worry that most state laws do not specify how information gathered by employers on employees can be used or with whom it can be shared.

MGT601: The Functions of Modern Management week 4 assignment