Chapter 4Planning in the Contemporary OrganizationPlanning DefinedThe process of outlining the activities that are necessary to achieve the goals of the organization.Where to we want to gohow are we going to get therePlanning as a Linking MechanismGoalsControlPlansDid we do itHowWhatGoalPlanObjectiveA desired future state the organization attempts to realize.Blueprint for specifying resource allocations, schedules and other actions necessary to obtain goalsSpecific, short term target for which measurable results can be obtainedCriteria for Effective GoalsBe specific and measurableCover key result areasBe challenging but realisticBe for a defined time periodBe linked to rewards.The Importance of Goals and PlansLegitimacy to external audiences such as:Investors, Customers, SuppliersA source of motivation and commitmentHelp employees identify with the organizationReduce uncertainty and clarify what employees should accomplish. Guides to actionGuides to actionRationale for decisionsStandard of performanceBenefits of Planning•Better Coordination–Planning provides a foundation for the coordination of a broad range of organizational activities.–A plan helps to define the responsibilities of individuals and work groups and helps coordinate their activities.Gives people direction on what they are supposed to doBenefits of Planning•Focus on Forward Thinking–The planning function forces managers to think ahead and consider resource needs and potential opportunities or threats that the organization may face in the future.Benefits of Planning•Participatory Work Environment–Successful planning requires the participation of a wide range of organizational members. Broad base of knowledge, experience and ideasMore likely to “buy-in” to plan they helped to developBenefits of Planning•More Effective Control System–Foundation for control. –The mechanism for ensuring that the organization is moving in the right direction toward achieving its goals.Costs of Planning•Managerial Time–Done properly, the planning process requires a substantial amount of managerial time and energy.•Delay in Decision Making–Planning can result in delays in decision making, which must be weighed against the importance of speed in response time.Weighing the Benefits Against the Costs of PlanningIn the final analysis, managers plan because planning leads to higher performance. Planning also helps managers cope with the many complex situations they face.Where Does Planning Start?•Top-Down Planning–Begins with the Board of Directors and top executives–Top managers generally more, knowledgeable about the firm as a whole.•Bottom-Up Planning–Initiated at the lowest level of the organization–People closest to the operating system, customers, and suppliers.Top-down planning works best when –success is dependent upon the ability to make high-level organizational changes in response to general threats and pressures.A bottom-up approach works best when –success is dependent upon sensitivity to customer needs and demands.Where Does Planning Start?STRATEGYInsight into how to create valueStrategic Planning•Strategic Planning–Is the process by which an organization makes decisions and takes actions that affect its long-run performance.–A strategic plan is the output of the strategic planning process. Strategic plans define both the markets in which the firm competes and the ways in which it competes in those markets.Levels of strategic planning•CorporateWhat business should we be in?Broad Strategies Board of Directors and top level executives•BusinessHow will we compete?Defines how each business unit will operate in its market areaWe will cover this more in the next sectionHarcourt Brace & Company.Levels of Goals/PlansMission StatementStrategic Goals/Plans Senior Management (Organization as a whole)Tactical/Functional Goals/Plans Middle Management (Major divisions, functions)Operational Goals/Plans Lower Management (Departments, individualsReason for existenceDefine specific results expected departments, work groups, individuals.major divisions and departments Broad statementsdescribing wherethe organization wants to be in the future.Harcourt Brace & Company.Time frame for Goals/PlansMission StatementStrategic Goals/Plans Senior Management (Organization as a whole)Operational Goals/Plans Lower Management (Departments, individualsLong-term Planning Up to five years.Intermediate-term Planning One to two yearsShort-term PlanningOne year or lessTactical/Functional Goals/Plans Middle Management (Major divisions, functions)Reason for existenceOperational Planning•Operational Planning–Focuses on determining the day-to-day activitiesthat are necessary to achieve the long-term goals of the organization.–Operational plans•Are more specific than strategic plans, address shorter-term issues, and are formulated by the mid-and lower-level managers who are responsible for the work groups in the organization.•Operational plans can be categorized as standing or single-use plans.Standing Plans•Standing Plans–Are designed to deal with organizational issues or problems that recur frequently.–Standing plans include policies, procedures, and rules:•Policies-general guidelines that govern how certain organizational situations will be addressed.•Procedures-are more specific and are designed to give explicit instructions on how to complete a recurring task.•Rules-provide detailed and specific guidelines for action.Single-Use Plans•Single-Use Plans–Are developed to address a specific organizational situation. –Single-use plans include:•Programs -govern a relatively comprehensive set of activities that are designed to accomplish a particular set of goals.•Projects-direct the efforts of individuals or work groups toward the achievement of specific, well-defined objectives.•Budgets-specify how financial resources should be allocated.Management by ObjectivesPreparation of next period’s objectives by employeesAction planning and job performance by employeeMutual setting of objectives by employee and supervisorMutual agreement on criteria for measuring accomplishment of objectivesIntermittent review of ongoing performance as neededEnd-of-period review by employee and supervisorParticipativeParticipativeParticipativeParticipativeManagement by ObjectivesManager and employee efforts are focused on activities that will lead to goal attainmentPerformance can be improved at all company levelsEmployees are motivatedDepartments and individual goals are aligned with company goals.•Benefits of Management by Objectives:Management by Objectives•Disadvantages of Management by Objectives:–Requires time and commitment of top management.–May require excessive paperwork.–May create a tendency to focus on short-term vs. long-term planning.–Can be difficult to establish and operationalize.Contingency PlanningContingency planning requires the development of two or more plans, each of which is based on a different set of strategic or operating conditions that could occur.Contingency Planning•When is Contingency Planning Needed?–Contingency planning is necessary in business environments that change rapidly and in unpredictable ways.–Contingency planning is useful when a firm’s effectiveness is dependent on a particular set of business conditions.•Demands on the Manager’s Time•Ambiguous and Uncertain Operating Environments•Resistance to ChangeBarriers to Effective PlanningOvercoming the Barriers to Planning•Involve Employees in Decision Making–Input from all levels of a firm is essential for successful planning.•Tolerate a Diversity of Views–Diverse views lead to a broader assessment of organizational problems and opportunities.•Encourage Strategic Thinking–Effective strategic thinking can be developed through training and practice.Strategic ManagementBUSINESSthe art of making irrevocable decisions based on insufficient knowledgeSTRATEGYInsight into how to create valueStrategy FormulationStrategy FormulationThe process of developing long-range plans to deal effectively with environmental opportunities and threats in light of corporate strengths and weaknessesComposed ofMissionObjectivesStrategiesPoliciesMissionMissionThe purpose or reason for the corporation’s existence. It may be narrow or broad in scope.NarrowBroadRailroadTransportationInsuranceFinancial ServicesEvaluate Current:•Mission•Goals•Strategies•Scan External•EnvironmentSocietal EnvironmentTask/Industry Environment SocioculturalEconomicPolitical-LegalTechnologicalInternalEnvironmentShareholdersGovernmentsSpecialInterestGroupsCustomersCreditorsCommunitiesSuppliersEmployee/Labor UnionsCompetitorsTrade AssociationsStructureCultureResourcesThe layer of the external environment that affects the organization indirectly.The layer of the external environment that directly influences the organization’s operations and performance.Evaluate Current:•Mission•Goals•Strategies•Scan External•EnvironmentIdentifyStrategicFactors:•Opportunities•ThreatsIdentifyStrategicFactors:•Strengths•WeaknessesScan InternalEnvironmentSWOT AnalysisGeneral & TaskEnvironmentInternalEnvironmentEvaluate Current:•Mission•Goals•StrategiesScan ExternalEnvironmentDefine New:•Mission•GoalsIdentifyStrategicFactors:•Opportunities•ThreatsIdentifyStrategicFactors:•Strengths•WeaknessesScan InternalEnvironmentFormulateStrategy:•Corporate•Business•FunctionalImplementStrategy viaChanges in:•Leadership•Culture•HumanResources•Informationand ControlSystemsLevels of StrategyCorporate Corporation’s overall direction and the management of its businessesBusinessEmphasizes improving the competitive position of a corporation’s products or unitsWhat business should we be in?How will we compete?Formulating Corporate StrategyWhat Business Should We Be IN?GENERIC CORPORATE STRATEGIESGROWTHSTABILITYRETRENCHMENTGENERIC CORPORATE STRATEGIESGROWTHVertical IntegrationHorizontal IntegrationConcentric Diversification Conglomerate DiversificationUp & down the value changeBackward -ForwardIncreasing Geographic locationsRange of productsUnrelated Related industriesGENERIC CORPORATE STRATEGIESSTABILITYPause/Proceed with CautionNo ChangeRETRENCHMENTTurnaroundDivestmentLiquidationFormulating Business StrategyHow Will We Compete?Porter's Competitive Strategies•Differentiation•Cost Leadership•FocusUnique/differentComponents of value chainCompetitive/market segmentSupportActivitiesPrimary ActivitiesValue Chain AnalysisIdentifying Resources and Capabilities That Can Add ValueSupportActivitiesPrimary ActivitiesInboundLogisticsValue Chain AnalysisIdentifying Resources and Capabilities That Can Add ValueSupportActivitiesPrimary ActivitiesInbound LogisticsOperationsValue Chain AnalysisIdentifying Resources and Capabilities That Can Add ValueSupportActivitiesPrimary ActivitiesInbound LogisticsOperationsOutboundLogisticsMarketing & SalesValue Chain AnalysisIdentifying Resources and Capabilities That Can Add ValueSupportActivitiesPrimary ActivitiesInbound LogisticsOperationsOutboundLogisticsMarketing & SalesServiceValue Chain AnalysisIdentifying Resources and Capabilities That Can Add ValueSupportActivitiesPrimary ActivitiesInbound LogisticsOperationsOutboundLogisticsMarketing & SalesServiceProcurementValue Chain AnalysisIdentifying Resources and Capabilities That Can Add ValueSupportActivitiesPrimary ActivitiesInbound LogisticsOperationsOutboundLogisticsMarketing & SalesServiceProcurementTechnological DevelopmentValue Chain AnalysisIdentifying Resources and Capabilities That Can Add ValueSupportActivitiesPrimary ActivitiesTechnological DevelopmentProcurementInbound LogisticsOperationsOutboundLogisticsMarketing & SalesServiceHuman Resource ManagementValue Chain AnalysisIdentifying Resources and Capabilities That Can Add ValueSupportActivitiesPrimary ActivitiesTechnological DevelopmentHuman Resource ManagementFirm InfrastructureProcurementInbound LogisticsOperationsOutboundLogisticsMarketing & SalesServiceValue Chain AnalysisIdentifying Resources and Capabilities That Can Add ValueSupportActivitiesPrimary ActivitiesTechnological DevelopmentHuman Resource ManagementFirm InfrastructureProcurementInbound LogisticsOperationsOutboundLogisticsMarketing & SalesServiceMARGINMARGINValue Chain AnalysisIdentifying Resources and Capabilities That Can Add ValueSupportActivitiesPrimary ActivitiesOutsourcingTechnological DevelopmentHuman Resource ManagementFirm InfrastructureProcurementInbound LogisticsOperationsOutboundLogisticsMarketing & SalesServiceMARGINMARGINStrategic Choice to Purchase Some Activities From Outside SuppliersChapter 8©2001 South-Western College PublishingPamela S. LewisStephen H. GoodmanPatricia M. FandtSlides Prepared byBruce R. BarringerUniversity of Central FloridaOrganizing for Quality, Productivity, and Job SatisfactionLearning ObjectivesSlide 1 of 31.Explain why organizing is an important managerial function, describe the process of organizing, and outline the primary stages of the process.2.Discuss the concept of job design and identify the core job dimensions that define a job.3.Explain how and why job design theory has evolved.Learning ObjectivesSlide 2 of 34.Describe the mechanistic, behavioral, and participatory approaches to job design.5.Understand both the vertical and horizontal associations that exist between individuals and work groups within the organization.6.Define delegation and discuss why it is important for managers to delegate.Learning ObjectivesSlide 3 of 37.Explain why managers often fail to delegate and suggest methods for improving delegation skills.Fundamentals of OrganizingOrganizing DefinedThe process of determining the tasks to be done, who will do them, and how those tasks will be managed and coordinated.The deployment of organizational resources to achieve strategic goals.CoordinationIntegrationOrganization chartCEOVP MarketingVP ProductionVP FinanceOrganizational Relationships•The working relationships that exist within an organization affect how its activities are accomplished and coordinated.•These Relationships are Defined By:–Chain of command–Span of control–Line and staff responsibilities–DelegationChain of CommandCEOVP MarketingVP ProductionVP FinanceAn unbroken line of authority that links all persons in an organization and shows who reports to whom.Unity of CommandA principle that each employee in the Organization is accountable to one, and only one, supervisor.Span of Management•Number of employees reporting to a supervisor•Tradition has recommended a span of management of four to seven subordinates.Span of ControlSlide 2 of 2Narrow Span of ControlManagerWide Span of ControlManagerLine & Staff•Line employees: directly involved in fulfillment of the primary mission of the organization•Staff employees: provide specialized service to support line effortsoperationssalesHRDelegation•Process to transfer authority and responsibility to positions below•Delegate authority to the lowest possible level.Delegation: Learning to Delegate EffectivelySlide 7 of 7•Principle 1:–Match the employee to the task.•Principle 2:–Be organized and communicate clearly.•Principle 3:–Transfer authority and accountability with the task.•Principle 4:–Choose the level of delegation carefully.DelegationThe Delegation TriangleResponsibilityAuthorityAccountabilityJustify outcomes to those above in the chain of command.Formal and legitimate right of a manager to make decisions, issue orders, and allocate resourcesJustify outcomes to those above in the chain of command.Work Specialization•Degree to which organizational tasks are subdivided into separate jobs•Production is efficient because employee perform small, well-defined tasks•Employees can acquire expertise.•Employees selected by ability and attitude.•Specialization is carried to an extreme, workers tend to become bored and alienated•Many companies are moving away from this principle.Tall Versus Flat Structure•Tall structurehas an overall narrow span of management and more levels in the hierarchy•Flat structurehas a wide span, is horizontally dispersed, and has fewer hierarchical levels•The trend is toward larger spans of managementCentralization/DecentralizationCentralizationDecentralizationDecision authority located near the topDecision authority located lower organizational levelsJob Design•The set of tasks and activities that are grouped together to define a particular job.–Job descriptions -detail the responsibilities and tasks associated with a given job.Core Job DimensionsSlide 1 of 4•Skill Variety•Task Identity•Task Significance•Autonomy•FeedbackCore Job DimensionsSlide 2 of 4The Core Dimensions of a JobCore Job Dimension Effect of DimensionSkill VarietyTask IdentityTask SignificanceAutonomyFeedbackMeaningfulness of the workResponsibility for outcomes of the workKnowledge of the results of the work activitiesCore Job DimensionsSlide 3 of 4•Skill Variety–The degree to which a job challenges the job holder to use various skills and abilities.•Task Identity–The degree to which a job requires the completion of an identifiable piece of work.•Task Significance–The degree to which a job contributes to the overall efforts of the organization.Core Job DimensionsSlide 4 of 4•Autonomy–The degree to which job holders have freedom, independence, and decision-making authority.•Feedback–The information provided to job holders regarding the effectiveness of their efforts.Behavioral ApproachesSlide 1 of 3•Job Enlargement–Programs designed to broaden job scope.–Job scope: •The number of different activities required in a job and the frequency with which each activity is performed.Behavioral ApproachesSlide 2 of 3•Job Enrichment–Programs designed to increase job depth.–Job depth:•The degree of control given to a job holder to perform their job.Behavioral ApproachesSlide 3 of 3•Job Rotation–Assigning individuals to a variety of job positions.–Employees rotate through a number of job positions that are at approximately the same level and have similar skill requirements.Participatory Approaches: Focus on QualitySlide 3 of 3•Self-Managed Teams–Groups of employees who design their jobs and work responsibilities to achieve the self-determined goals and objectives of the team.Chapter 9Designing the ContemporaryOrganizationOrganizational Design DefinedThe way in which the activities of an organization are arranged and coordinated so that its mission can be fulfilled and its goals achieved.Components of Organizational DesignOverall organizational design is defined by three primary components:Organizational StructureIntegrating MechanismsLocus of Decision MakingOrganizational Structure•Organizational Structure–Defines the primary reporting relationships that exist within an organization.–The chain of command and hierarchy of responsibility, authority, and accountability are established through organizational structure.–Common forms of organizational structure:•Functional structure, division structure, matrix structure, and network structure.Mechanistic and Organic OrganizationsMechanisticOrganicDegree of change uncertaintyVertical structure1. Specialized tasks 2. Strict hierarchy of authority, many rules 3. Vertical communication and reporting systems 4. Few teams, task forces, or integrators 5. Centralized decision making1. Shared tasks 2. Relaxed hierarchy, authority by expertise, few rules 3. Horizontal communications 4. Many teams, task forces, 5. Informal, decentralized decision makingStableUnchangingChaoticDynamicHorizontal structureDepartmentationThe fundamental principle by which individuals are grouped into departments and departments into the organizationFunctionalPresidentCEOHuman ResourcesManufacturingAccountingDepartments based on similar skills and resource use.Deep expertiseEfficiencyLack ofcommunicationLack ofinnovationDivisionalPresidentCEODivision 1Division 2HRManAcctHRManAcctSelf containedProductProgramGeographyFocusRedundancyEncourages decentralizationMatrixPresidentCEOHuman ResourcesManufacturingAccountingProduct 1Product 2One employee reports to 2 bosses at same timeCross functional TeamsInnovativeCreativeTimeConflicting demandsEmployee caught in MiddleTeamCross functionalTrue team = mutual accountabilityinteracting closely shared commitmentCreativityFaster responseto changeHigh MaintenanceTimeNetworkDesignerManufacturingHubMarketingHuman ResourcesSubcontracts many functions to other companiesVirtual organizationBest of the BreedChanged quicklyGive up controlCoordinationINTERDEPENDENCEPooled(product delivery)Sequential(product manufacture)Reciprocal(new product development)COORDINATION StandardizationRulesStandardizationPlanningRulesSchedulesStandardizationRulesSchedulesMutual adjustmentlowhighBanksAssembly LinesR&DPlanningDesignLocus of Decision Making•Locus of Decision Making–The degree to which decision making is centralized versus decentralized.–Centralized decision making•Advantage–Gives top-level management maximum control.•Disadvantage–Limits the organization’s ability to respond quickly and effectively to changes in the environment.Locus of Decision Making•Locus of Decision Making–Decentralized decision making•Advantage–Organizations can respond to environmental change more rapidly and effectively because the decision makers are the people closest to the situation.•Disadvantage–Top-level managers lose some control.GOOD LUCK GETTING READY FORTHE TESTChapter 10©2001 South-Western College PublishingPamela S. LewisStephen H. GoodmanPatricia M. FandtSlides Prepared byBruce R. BarringerUniversity of Central FloridaManaging Human ResourcesHuman Resource Management DefinedManagement of the organization’s employees; consists of all the activities required to enhance the effectiveness of an organization’s workforce in achieving organizational goals and objectives.MAJOR RESPONSIBILITIES OF HUMAN RESOURCE MANAGEMENT*ATTRACTING HUMAN RESOURCES*DEVELOPING HUMAN RESOURCES *MAINTAINING HUMAN RESOURCESATTRACTING DEVELOPING MAINTAININGHuman ResourceTrainingCompensationPlanningJob AnalysisDevelopmentEmployee RelationsRecruitmentPerformanceHealth & SafetyAppraisalSelectionTermination/OutplacementMAJOR RESPONSIBILITIES OF HUMAN RESOURCE MANAGEMENT*ATTRACTINGHUMAN RESOURCES*DEVELOPINGHUMAN RESOURCES *MAINTAININGHUMAN RESOURCES ATTRACTINGDEVELOPINGMAINTAININGGetting the right person for the jobHelping them the acquire the skills needSeeing employees are motivated, healthy, etc.Legal Environment of Human Resource Management•Equal Employment Opportunity Legislation–The Civil Rights Act of 1964, the Civil Rights Restoration Act of 1988, and the Civil Rights Act of 1991 are equal employment opportunity laws.–Equal employment opportunity laws prohibit the consideration of race, color, religion, national origin, or gender in employment decisions.Legal Environment of Human Resource Management•Other Legislation–Such as the Americans with Disabilities Act and the Age Discrimination Act of 1967, prohibits employment decisions based on biases against qualified individuals with disabilities and the elderly.–In general, the purpose of EEO legislation is to ensure that unemployment decisions are based on job-related criteria only.Legal Environment of Human Resource Management–Family and Medical Leave Act of 1993•Allows individuals to take up to 12 weeks of unpaid leave per year for the birth or adoption of a baby or the illness of a family member.Legal Environment of Human Resource Management•Affirmative Action–The legal requirement that federal contractors, some public employees, and private organizations under court order for short-term remedies must actively recruit, hire, and promote members of minority groups and other protected classes if such individuals are underrepresented in the organization.Legal Environment of Human Resource Management•Sexual Harassment–Actions that are sexually directed, unwanted, and subject the worker to adverse employment conditions. •Hostile Environment Harassment–When the victim does not suffer any tangible economic injury, but workplace conduct is sufficiently severe to create an abusive work environment.MAJOR RESPONSIBILITIES OF HUMAN RESOURCE MANAGEMENT*ATTRACTING HUMAN RESOURCES*DEVELOPING HUMAN RESOURCES *MAINTAINING HUMAN RESOURCESATTRACTING DEVELOPING MAINTAININGHuman ResourceTrainingCompensationPlanningJob AnalysisDevelopmentEmployee RelationsRecruitmentPerformanceHealth & SafetyAppraisalSelectionTermination/OutplacementAttracting Dev Human Resource PlanningJob AnalysisDetermining future human resource needs relative to strategic plan and taking actions necessary to meet those needs.Forecasting -Demand & SupplyJob DescriptionsJob SpecificationsIT SystemsJOB ANALYSISJob Analysis is used to identify the tasks, duties andresponsibilities of a job; and the skillsand knowledge required to perform it.JOB DESCRIPTIONDutiesResponsibilitiesRelationshipAccountabilityJOB SPECIFICATIONEducationSkills, Education, EquipmentWork EnvironmentExperienceused for:SelectionHuman Resource PlanningEmployee DevelopmentPerformance Appraisal/Setting Job StandardsDeveloping Wage and Salary ClassificationsRecruitmentSelectionFinding/attracting qualified candidates Internal recruitmentExternal recruitmentThe process of evaluating and choosing the best qualified candidate from the pool of applicants.Application FormsEmployment Testing MeasureInterviewsImportance of Reliability and ValidityDeveloping Main Training/DevelopingPerformance AppraisalA planned effort to assist employees in learning job-related behaviorsto improve performance.OrientationOn-the-job training Technical trainingManagement development programsA systematic process of evaluating employee job-related achievements, strengths, weaknesses, as well as determining ways to improve performance.Performance AppraisalRating PerformanceBehavior-oriented approaches to performance appraisalFocus on assessing employee behavior.Results-oriented approaches to performance appraisalUse objective performance criteria. Purposes of performance appraisal process:MotivationPersonnel movementTrainingFeedbackProblemsHalo EffectOccurs when a manager rates an employee high or low on all items because of one characteristic.Rater PatternsOccurs when a rater develops a pattern in his or her ratings of employees.Contrast ErrorRecency ErrorMaintaining CompensationLabor RelationsHealth & SafetyTermination/OutplacementWagesIncentivesBenefitsThe formal process through which employees and unions negotiate terms and conditions of employment.