Chapter 4: Creating Organizational Alignment Jackson and Schuler © 2003 South-Western College Publishing. All rights reserved. Eighth edition

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

© 2003 South-Western College Publishing. All rights reserved. 4–2

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


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.


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.


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.


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.


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


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


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


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.


Levels of StrategyLevels of Strategy

Corporate DiversificationCorporate Diversification Business-Level Competitive Business-Level Competitive FunctionalFunctional


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.


Developing a Competitive Strategy Developing a Competitive Strategy (cont’d)(cont’d)

SWOT Analysis:SWOT Analysis: StrengthsStrengths WeaknessesWeaknesses OpportunitiesOpportunities ThreatsThreats


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


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?


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


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


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


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


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


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


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.


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


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


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


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


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


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


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


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


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.


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


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


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


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


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

Documents

Chapter 4: Creating Organizational Alignment Jackson and Schuler © 2003 South-Western College Publishing. All rights reserved. Eighth edition