module 10 implementing strategy : budjets, policies, best practices, support systems, and rewards
TRANSCRIPT
MODULE 10
IMPLEMENTING STRATEGY :
BUDJETS, POLICIES, BEST PRACTICES, SUPPORT
SYSTEMS, AND REWARDS
MODULE OUTLINE
Linking Budgets to Strategy
Crafting Strategy-Supportive Policies &
Procedures
Instituting Best Practices & a
Commitment to Continuous Improvement
Installing Support Systems
Designing Strategy-Supportive Reward
Systems
LINKING THE BUDGET TO STRATEGY
Strategy implementers need to
See that strategy-critical units have enough resourcesScreen requests for new capital projects & bigger operating budgetsBe willing to shift resources to support new strategic prioritiesMake persuasive case to superiors on what resources are really needed
LINKING THE BUDGET TO STRATEGY
New strategies often call for significant budget reallocations
Down sizing some areas & upsizing others Killing activities that make or break success
How Well allocations are linked to the needs of strategy can either promote or impeded the implementation process!
HOW POLICIES & PROCEDURE AID STRATEGY IMPLEMENTATION
Provide top-down guidance regarding expected behaviors & performance
Help align actions & behavior with strategy
Help enforce consistency in performance of strategy – critical activities in geographically
scattered operating units
Serves as powerful lever for changing corporate culture to produce strong fit with a new strategy
CREATING STRATEGY-SUPPORTIVEPOLICIES & PROCEDURES
Role of new policies in implementing strategy Channel actions, behaviors, & decisions in directions to promotes strategy execution counteract tendencies of people to resist chosen strategy.
Too much policy can be as stifling as wrong policy or as chaotic as no policy
Sometimes, BEST POLICY is willingness to “ empower” employees
“ Empowerment “ is important when employee initiative is essential to good strategy execution.
INSTITIUTING BEST PRACTICES & CONTINUOUS IMPROVEMENT
Searching out & adopting “ best practices “ is integral to effective implementation
Benchmarking has spawned new approach to improving strategy execution
Reengineering
Continuous improvement programs
Total quality management- TQM
INSTITUTING BEST PRACTICE & CONTINUOS IMPROVEMENT
Quality improvement programs are tools for implementing strategies keyed to
Defect-free manufactureSuperior product quality serviceTotal customer satisfaction
Identifying & implementing best practices is a journey, not a Destination; it’s an exercise in doing things in a world-class
manner!
WHAT IS TOTAL QUALITY
MANAGEMRENT-TQM?
Creating a TOTAL QUALITY
CULTURE bent on
CONTINOUSLY IMPROVING
The performance of every task and
Value –chain activity!
IMPLEMENTING A CONTINIOUS IMPROVEMENT PHILOSOPHY
Instill enthusiasm & commitment to doing things right from top to bottom of forward each day : kaizenIgnite employee efforts to be creative in improving performance of value-chain activities.Preach there is no such thing as good enough & everyone must be involved Reform the corporate culture
BEST PRACTICE PROGRAMS
Aim atImproved efficiency Reduced costs Better product quality Greater customer satisfaction
Involves benchmarking against companies regarded as
“ Best in industry “ or“ Best in world “
REENGINEERING & TQM
Reengineering vs. TQM programs REENGINEERING seeks one-time quantum gains on order of 30 to 50% or more TQM seeks ongoing incremental improvement
Reengineering vs. TQM are not mutually exclusive First, reengineering is used to produce a good basic design yielding dramatic improvements Then, TQM is used to perfect process, gradually improving efficiency.
USING BEST PRACTICE PROGRAMS AS AN IMPLEMENTATION TOOL
Select indicators of successful strategy execution Next,benchmark against best practice companies Reengineer business processes Then, build a TQ culture
Starts with management commitment Install TQ-supportive employees to do the “ right things” Provide employees with quick access to required informationPreach that performance can be improved
INSTALLING SUPPORT SYSTEMS
Strategy implementers must
Invest in creating support
Systems that promote
Successful strategy execution!
EXAMPLES: SUPPORT SYSTEMS
Computerized reservation system
Computerized parcel-tracking system &
leading –edge flight operations systems
Sophisticated maintenance support system
EXAMPLES: SUPPORT SYSTEMS
System to obtain early warning signs of product problems & changing tastes
System to monitor sales, at 15inutes intervals, to suggest product mix changes & to improve customer response
STRATEGIC MANAGEMENT PRINCIPLE
Innovative, state-of-the-art Support systems can be a basis
For competitive advantage if They give a firm capabilities if
They give a firm capabilities that rivals can’t match!
FORMAL REPORTIN OFN STRATEGY-CRITICAL INFORMATION
Accurate & timely information is essential to guide actionPrompt feedback on implementation initiatives needed BEFFORE actions are fully completed monitoring early implementation actions serves two purposes
Quick detection of needed to adjust either strategy or its implementationAssuring things move ahead as planned
Key strategic performance indicators must be tracked as often as practical
FORMAL REPORTING OFSTRATEGY-CRITICAL INFORMATION
Information systems should cover 4 areas
Customer data
Operations data
Employee data
Financial performance data
Accurate, timely information allows Strategists to monitor progress and take
Corrective actions promptly!
GAINING COMMITMENT TO CHOSEN STRATEGY
Motivational practicesRewards & incentives inducing employees
to make the strategy work promoting a results orientation
The strategy implementer’s challenges to design areward structure that motivates people to do the things
It takes to make the strategy work successfully!
DEVELOPING AN EFFECTIVE REWARD STRUCTURE INVOLVES
CREATIVE using full range of reward punishment mechanisms
Salary raises Bonuses, stock options,& “ perks”Promotions Praise & recognition Constructive criticismpeer pressureMore (or less) responsibility Opportunity for personal satisfaction
MOTIVATING PEOPLE TOEXECUTE THE STRATEGY WELL
Support for good strategy execution involves
Inspiring & challenging employees to
do their best
Involving employees in decisions about how to perform their jobs
Making jobs interesting & satisfying
EXAMPLES: MOTIVATIONAL PRACTICES
Every employee, including the president, gets a weekly 10% bonus by coming to work on time each day that week
Employees meet regularly to hear inspirational speeches, sing company songs, & chant the corporate litany
EXAMPLE : MOTIVATIONAL PRACTICES
Hold inspirational get-together for
sales force organizations
Encourages competition among brand managers; system breeds people who love to compete and excel
POSITIVE OR NAGATIVE REWARS?
Elements of both are necessary
But, positive reinforcement should outweigh negative work environment
LINKING WORK ASSIGNMENTS TO PERFORMANCE TARGETS
Create RESULT-ORIENTED reward systemDefine jobs in terms of RESULTS TO BE ACCOMPLISHWSStress “ achievement “ Track actual achievement vs. targeted performanceUse performance targets in strategic plan as basis for incentive compensation Have SEVERAL PERFORMANCE measures
REWARDING PERFORMANCE
Provide ample rewards to people
Who achieve objectives
and
Deny rewards to those not
Achieving objectives!
Objective
REWARDING PERFORMANCE
“ Doing a good job” means achieving agreed-upon performance targets
“ No excuses “ standard must prevail
Cannot reward “ trying hard”
Standards
STRATEGIC MANAGEMENT PRINCIPLE
The strategy implementer’s standard for judging whether individuals and organizational units have done a good job must be whether the performance targets in the strategic plan were achieved!
GUIDELINES: DESIGNING AN
EFFECTIVE REWARD SYSTEM Performance payoff must be a major, not minor, piece of total compensation package Incentive must be administered with scrupulous care & employeeSystem must be administered with scrupulous care & fairness Incentives must be linked tightly to achieving only performance targets in strategic plan Performance targets each person is expected to achieve must involve outcomes person can personally affect
WHY PERFORMANCE-REWARDLINK IS IMPORTANT
Reward structure is management’s most powerful implementation tool
Kinds of incentives offered signal desired behavior & performance
Rewards induce people to go all out to
Execute strategy effectively
Achieve objectives in strategic plan
MAKING PERFORMANCE-DRIVEN COMPENSATION WORKCOMPENSATION WORK
Keys to implementing pay-for-performanceMake performance targets basis for designing incentive system Ensure performance targets are clearly defined & every person/group is accountable for achieving them Be fair & impartial in comparing actual performance against targets Avoid skirting system to reward non-performers
MAKING PERFORMANCE-DRIVENCOMPENSATION WORK
Keys to implementing pay-for-performance Explore causes of deviations to assess if they
are due to“ poor” individual performance or Circumstances beyond individual’s control
Hold people accountable for carrying out their assigned part of strategic plan Base rewards on caliber of each individual’s accomplishments