Chapter 4:Chapter 4:
Creating Organizational AlignmentCreating Organizational Alignment
Jackson and SchulerJackson and Schuler
© 2003 South-Western College Publishing. All rights reserved.
Eighth editionEighth edition
Managing Human Managing Human ResourcesResources
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Chapter OutlineChapter Outline
Strategic Importance of the Organization Strategic Importance of the Organization EnvironmentEnvironment
Company Leadership: Vision, Mission, and Company Leadership: Vision, Mission, and ValuesValues
StrategyStrategy Organization StructureOrganization Structure Organizational CultureOrganizational Culture Partnership Roles for Creating Organizational Partnership Roles for Creating Organizational
AlignmentAlignment
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Strategic Importance of Strategic Importance of Organizational EnvironmentOrganizational Environment
Organizational environment includes:Organizational environment includes: Company leadershipCompany leadership Corporate and business strategiesCorporate and business strategies Organizational structureOrganizational structure Organizational cultureOrganizational culture
HR practices should be aligned with other HR practices should be aligned with other aspects of environment.aspects of environment.
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Company LeadershipCompany Leadership
VisionVision Top management’s view of the kind of Top management’s view of the kind of
company it is trying to create.company it is trying to create. MissionMission
Defines a company’s business and provides Defines a company’s business and provides a clear view of what the company is trying to a clear view of what the company is trying to accomplishaccomplish
Provides guidance to fulfill the vision.Provides guidance to fulfill the vision.
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LeadershipLeadership
ValuesValues Are strong enduring beliefs and tenets Are strong enduring beliefs and tenets
that the company holds dear.that the company holds dear. Differentiate the company from other Differentiate the company from other
companies.companies. State how employees are expected State how employees are expected
to behave.to behave.
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Leadership (cont’d)Leadership (cont’d)
The vision, mission, and values convey to The vision, mission, and values convey to employees answers to questions such as:employees answers to questions such as: Where are we going?Where are we going? Why are we going?Why are we going? How will we get there?How will we get there?
HR professionals participate in the creation, HR professionals participate in the creation, maintenance and revision of vision, mission, maintenance and revision of vision, mission, and values statements and develop practices and values statements and develop practices to support them.to support them.
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Examples of Vision StatementsExamples of Vision Statements
““To become the world’s most respected service To become the world’s most respected service brand.”brand.”
——American ExpressAmerican Express
““We want to be the world’s No. 1 hospitality We want to be the world’s No. 1 hospitality provider.”provider.”
——Ritz CarltonRitz Carlton
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State Farm Insurance Mission State Farm Insurance Mission StatementStatement
At State Farm Insurance, the mission is to: At State Farm Insurance, the mission is to: Provide quality insurance productsProvide quality insurance products Offer friendly policyholder serviceOffer friendly policyholder service Settle claims fairly and quicklySettle claims fairly and quickly Charge reasonable rates for our insurance productsCharge reasonable rates for our insurance products Maintain financial stability to fulfill our commitment to Maintain financial stability to fulfill our commitment to
our policyholdersour policyholders Uphold the State Farm marketing partnershipUphold the State Farm marketing partnership
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State Farm Values StatementState Farm Values Statement Providing customers with the best possible Providing customers with the best possible
service and valueservice and value Building lasting relationships among Building lasting relationships among
customers, agents, employees and customers, agents, employees and communities through respect, understanding, communities through respect, understanding, and mutual trustand mutual trust
Being financially strongBeing financially strong Keeping promises by always dealing fairly and Keeping promises by always dealing fairly and
with integritywith integrity
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StrategyStrategy
A set of integrated and coordinated A set of integrated and coordinated commitments and actions intended to achieve commitments and actions intended to achieve a stated goal.a stated goal.
A guide for action that is closely linked to the A guide for action that is closely linked to the nature of the business.nature of the business.
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Levels of StrategyLevels of Strategy
Corporate DiversificationCorporate Diversification Business-Level Competitive Business-Level Competitive FunctionalFunctional
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Developing a Competitive StrategyDeveloping a Competitive Strategy
Firms vary on how they approach strategy:Firms vary on how they approach strategy: Some strategies reflect the founder’s Some strategies reflect the founder’s
intuitions and passions.intuitions and passions. Others are based on systematic analysis.Others are based on systematic analysis.
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Developing a Competitive Strategy Developing a Competitive Strategy (cont’d)(cont’d)
SWOT Analysis:SWOT Analysis: StrengthsStrengths WeaknessesWeaknesses OpportunitiesOpportunities ThreatsThreats
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Competitive AnalysisCompetitive Analysis
Five-Five-Forces Forces ModelModel(Porter)(Porter)
The FirmThe FirmSuppliersSuppliers
Substitute ProductsSubstitute Products
New EntrantsNew Entrants
ExistingExistingRival FirmsRival Firms
Identifies ThreatsIdentifies ThreatsAnd OpportunitiesAnd Opportunities
BuyersBuyers
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Questions to Ask About CompetitorsQuestions to Ask About Competitors
What drives the competitor?What drives the competitor? What is the competitor’s current strategy and What is the competitor’s current strategy and
what strategy could it adopt?what strategy could it adopt? What assumptions does the competitor make What assumptions does the competitor make
about the industry?about the industry? What are the competitor’s capabilities?What are the competitor’s capabilities?
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Competing for LaborCompeting for Labor
Systematic use of competitive analysis for Systematic use of competitive analysis for understanding the competition for labor isn’t understanding the competition for labor isn’t widely used.widely used.
Benchmarking Benchmarking Identify “industry leaders”Identify “industry leaders” Analyze “best practices”Analyze “best practices” Transfer best practices to own organizationTransfer best practices to own organization Usually a collaborative effort focusing on Usually a collaborative effort focusing on
specific HRM aspectsspecific HRM aspects
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Assessing Strengths and Assessing Strengths and WeaknessesWeaknesses
Resources:Resources: Tangible assetsTangible assets Intangible assetsIntangible assets Unique resourcesUnique resources
Capabilities:Capabilities: Integration of Integration of resourcesresources
Core Competencies:Core Competencies: Unique knowledgeUnique knowledge Sustained competitiveSustained competitive
advantageadvantage
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Managing Managing HumanHuman
Resources to Resources to Support Support
Continuous Continuous LearningLearning
Aligning HRM for Organizational Aligning HRM for Organizational LearningLearning
OrganizationOrganizational al
Environment Environment for Learning for Learning OrganizationOrganization
ss
• LeadershipLeadership• StrategyStrategy• CultureCulture• Design and Design and
StructureStructure
Learning OrientationLearning Orientationand Capacityand Capacity• Think criticallyThink critically• Create new Create new
knowledgeknowledge• Learn from othersLearn from others• Work across Work across
boundariesboundaries
• StaffingStaffing• Training and Training and
DevelopmentDevelopment• Performance Performance
AppraisalsAppraisals• RewardsRewards
Needed Needed BehaviorsBehaviors
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Four Types of Competitive StrategyFour Types of Competitive Strategy
DifferentiationDifferentiationStrategyStrategy
Narrow Narrow Target Target MarketMarket
Broad Broad Target Target MarketMarket
Cost Cost LeadershipLeadershipStrategyStrategy
Focused Cost Focused Cost LeadershipLeadershipStrategyStrategy
Focused Focused DifferentiationDifferentiation
StrategyStrategy
Desire forDesire forSomething UniqueSomething Unique
Desire forDesire forLow CostLow Cost
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Behavioral Imperatives for Behavioral Imperatives for Alternative StrategiesAlternative Strategies
InnovationInnovation Total QualityTotal Quality Low CostLow Cost
• ExperimentationExperimentation• Risk TakingRisk Taking• Project Project
ManagementManagement• TeamworkTeamwork
• Responsiveness Responsiveness to customersto customers
• Problem SolvingProblem Solving• Quality Quality
StandardsStandards
• Efficient ProductionEfficient Production• Lower Labor Costs:Lower Labor Costs:
• Part-time/shift workPart-time/shift work• Repetitive workRepetitive work• Minimum benefitsMinimum benefits
• ReengineeringReengineering
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What Does Quality Mean? What Does Quality Mean?
In Products:In Products: PerformancePerformance FeaturesFeatures ReliabilityReliability ConformanceConformance DurabilityDurability ServiceabilityServiceability AestheticsAesthetics Perceived qualityPerceived quality
In Services:In Services: TangiblesTangibles ReliabilityReliability ResponsivenessResponsiveness AssuranceAssurance EmpathyEmpathy InsightInsight Problem-solvingProblem-solving
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Organization StructureOrganization Structure
The allocation of tasks and responsibilities The allocation of tasks and responsibilities among individuals and departments to support among individuals and departments to support the firm’s strategy.the firm’s strategy. Departmental structureDepartmental structure Divisional structureDivisional structure MatrixMatrix Process-based horizontalProcess-based horizontal NetworkNetwork
ABC, Inc.
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Departmental StructureDepartmental Structure
Characteristics:Characteristics: Based on functions: marketing, production, Based on functions: marketing, production,
and other activitiesand other activities Focused on specialized knowledgeFocused on specialized knowledge Maintaining coordination may be difficult as Maintaining coordination may be difficult as
firm grows.firm grows. Provides clear paths for Provides clear paths for
advancementadvancement
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Divisional StructureDivisional Structure
Characteristics:Characteristics: Based on product lines, customer markets or Based on product lines, customer markets or
geographical locationsgeographical locations Encourages cross-functional workEncourages cross-functional work Creates duplication of support functionsCreates duplication of support functions
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Matrix StructureMatrix Structure Characteristics:Characteristics:
Dual reporting to functional and divisional Dual reporting to functional and divisional heads; lines of authority may be ambiguousheads; lines of authority may be ambiguous
Employees are shared across organizational Employees are shared across organizational unitsunits
Facilitates organizational learningFacilitates organizational learning
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Process-Based Horizontal StructureProcess-Based Horizontal Structure
Characteristics:Characteristics: Flat hierarchical structureFlat hierarchical structure Use of teamsUse of teams Quick and continuous improvementQuick and continuous improvement Broad skill developmentBroad skill development Fits Total Quality Management (TQM) and Fits Total Quality Management (TQM) and
process reengineering approachesprocess reengineering approaches
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Organization DesignOrganization Design
Organizational Processes:Organizational Processes: Total Quality ManagementTotal Quality Management Baldrige AwardBaldrige Award ISO 9000 StandardsISO 9000 Standards Employee EmpowermentEmployee Empowerment
Process Reengineering:Process Reengineering: New ways to get work doneNew ways to get work done Examine breadth and depth of changeExamine breadth and depth of change
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Network StructureNetwork Structure
Characteristics:Characteristics: Many outsourced activitiesMany outsourced activities Uses information technology for coordinationUses information technology for coordination Facilitates constant change and adaptation Facilitates constant change and adaptation Challenge to manage and controlChallenge to manage and control
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Structures That Cross Country Structures That Cross Country BordersBorders
International StructureInternational Structure Separate group responsible for international Separate group responsible for international
activityactivity Global Product StructureGlobal Product Structure
Expand by offering new products/servicesExpand by offering new products/services Global Regions StructureGlobal Regions Structure
Group activities by similar economies, culturesGroup activities by similar economies, cultures Transnational StructureTransnational Structure
Matrix structure based on products & regionsMatrix structure based on products & regions Manage teams across bordersManage teams across borders
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Coordinating with Global TeamsCoordinating with Global Teams
Facilitate coordination among product/regional Facilitate coordination among product/regional unitsunits
Members may be from same or different Members may be from same or different departments.departments. Formal, informal, same or multi-level groupsFormal, informal, same or multi-level groups May include people from other companiesMay include people from other companies
HR information management systems improve HR information management systems improve coordination and consistencycoordination and consistency
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Organizational CultureOrganizational Culture
The unique pattern of sharedThe unique pattern of shared assumptions, assumptions, values values norms norms
that shape the that shape the socialization activitiessocialization activities language, symbolslanguage, symbols rites and ceremonies rites and ceremonies
of people in the organization.of people in the organization.
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Organizational Culture (cont’d)Organizational Culture (cont’d)
ClanClanCulture:Culture:Tradition, loyalty,Tradition, loyalty,commitment, team-commitment, team-work, socializationwork, socialization
EntrepreneurialEntrepreneurialCulture:Culture:Risk-taking,Risk-taking,creativity, dynamismcreativity, dynamism
BureaucraticBureaucraticCulture:Culture:Formalization, rules,Formalization, rules,procedures, procedures, hierarchyhierarchy
MarketMarketCulture:Culture:Financial goals,Financial goals,competitiveness,competitiveness,profits orientationprofits orientation
InternalInternal ExternalExternalFocus of AttentionFocus of Attention
Formal Formal Control Control OrientationOrientation
FlexibleFlexible
StableStable
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Organizational SubculturesOrganizational Subcultures
May arise from differences among:May arise from differences among: Firms that mergeFirms that merge Demographic groupsDemographic groups Occupational groupsOccupational groups National and regional groupsNational and regional groups IndustriesIndustries
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Hofstede’s Dimensions of Hofstede’s Dimensions of Industry CultureIndustry Culture
Employee-oriented versus results-orientedEmployee-oriented versus results-oriented Parochial versus professionalParochial versus professional Open versus closedOpen versus closed Loose control versus tight controlLoose control versus tight control
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Strategic Importance of CultureStrategic Importance of Culture
Strong CulturesStrong Cultures Provide clear guidelines for behaviorProvide clear guidelines for behavior Can enhance performance when they match Can enhance performance when they match
strategic objectivesstrategic objectives Must be in sync with Must be in sync with
stakeholder expectations stakeholder expectations
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Partnership Roles for Creating Partnership Roles for Creating AlignmentAlignment
Line Managers:
•Build Culture
•Understand structure
•Develop an empowered workplace
•Ensure internal alignment
HR Professionals:
•Align HR with vision mission and values
•Support organizational culture
•Work with line managers to support strategy
•Monitor alignment
Employees:•Contribute to
mission•Adapt to culture•Develop skills to
support strategy
•Keep organizational goals in mind
•Assist in job redesign
•Monitor own needs