Strategy Strategy Implementation: Implementation:

Staffing and DirectingStaffing and Directing

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StaffingStaffing• Staffing focuses on the selection and use Staffing focuses on the selection and use

of employees.of employees.• Implementation of new strategies often Implementation of new strategies often

call for new human resource call for new human resource management priorities and a different management priorities and a different use of personnel.use of personnel.

• Some staffing issues include:Some staffing issues include:– Hiring new people with new skillsHiring new people with new skills– Firing people with inappropriate or Firing people with inappropriate or

substandard skillssubstandard skills– Training existing employees to learn new Training existing employees to learn new

skillsskills 2

• If growth strategy implemented:If growth strategy implemented:– New people need to be hired and trainedNew people need to be hired and trained– Experienced people with necessary skills need Experienced people with necessary skills need

to be found for newly created managerial to be found for newly created managerial positionspositions

– If growth strategy thru acquisition, may need If growth strategy thru acquisition, may need to replace several managers in the acquired to replace several managers in the acquired companycompany

– May need to appoint an integration manager to May need to appoint an integration manager to shepherd the company through the acquisition shepherd the company through the acquisition or merger so as to avoid losing highly skilled or merger so as to avoid losing highly skilled people who are difficult to replace in the people who are difficult to replace in the processprocess

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• If retrenchment strategy If retrenchment strategy implemented: implemented: – Large number of people may need to be Large number of people may need to be

laid offlaid off– Management needs to specify the Management needs to specify the

criteria to be used in making these criteria to be used in making these personnel decisionspersonnel decisions

– Sometimes corporations find it easier Sometimes corporations find it easier to close or sell off an entire division to close or sell off an entire division than to choose which individuals to firethan to choose which individuals to fire

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Changing Hiring and Changing Hiring and Training RequirementsTraining Requirements

• Having formulated new strategy, a corporation Having formulated new strategy, a corporation may find it needs to hire different people or train may find it needs to hire different people or train current employees to implement new strategy.current employees to implement new strategy.

• One way to implement a company’s business One way to implement a company’s business strategy such as overall low cost or for a strategy such as overall low cost or for a differentiation strategy emphasizing quality or differentiation strategy emphasizing quality or customer servicecustomer service

• Training also important during retrenchment Training also important during retrenchment strategy – successful downsizing means that strategy – successful downsizing means that company has to invest in its remaining company has to invest in its remaining employees.employees.

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• A study of 51% corporations in UK found that A study of 51% corporations in UK found that 71% leading companies rated staff learning 71% leading companies rated staff learning and training as important or very important.and training as important or very important.

• Study of 155 US manufacturing firms Study of 155 US manufacturing firms revealed that those with training programs revealed that those with training programs had 19% higher productivityhad 19% higher productivity

• Another study found that a doubling of Another study found that a doubling of formal training per employee resulted in 7% formal training per employee resulted in 7% in scrapin scrap

• Motorola estimates that every $1 it spends Motorola estimates that every $1 it spends on training delivers $ 30 in productivity on training delivers $ 30 in productivity gains within three years gains within three years

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Training

Matching Management to Matching Management to StrategyStrategy

• The current CEO may not be appropriate The current CEO may not be appropriate to implement the new strategy.to implement the new strategy.

• Research indicates that there may be a Research indicates that there may be a career life cycle for top executivescareer life cycle for top executives

• During the early years – During the early years – learning stagelearning stage– They tend to experiment intensively with They tend to experiment intensively with

product lines to learn about their businessproduct lines to learn about their business

• Later during the Later during the harvest stageharvest stage, , accumulated knowledge allows them to accumulated knowledge allows them to reduce experimentation and increase reduce experimentation and increase performanceperformance

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• Decline stageDecline stage occurs when occurs when experimentation reduces further and experimentation reduces further and performance declines.performance declines.

• Some executives retire before any Some executives retire before any decline occursdecline occurs

• Others fend off decline longer than Others fend off decline longer than their counterpartstheir counterparts

• The length of time spent in each The length of time spent in each stage varies among CEO’S and it is stage varies among CEO’S and it is up to the board to decide when a top up to the board to decide when a top executive should be replaced.executive should be replaced.

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• Most appropriate type of general Most appropriate type of general manager depends on the new desired manager depends on the new desired strategic direction of firm:strategic direction of firm:– Corporation following a concentration Corporation following a concentration

strategy emphasizing vertical or horizontal strategy emphasizing vertical or horizontal growth would probably want an aggressive growth would probably want an aggressive new chief executive with a great deal of new chief executive with a great deal of experience in that particular industry - experience in that particular industry - Dynamic Industry Expert Dynamic Industry Expert

– A diversification strategy might call for A diversification strategy might call for someone with an analytical mind who is someone with an analytical mind who is highly knowledgeable of other industries highly knowledgeable of other industries and who can manage diverse product lines – and who can manage diverse product lines – Analytical Portfolio ManagerAnalytical Portfolio Manager

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– A corporation choosing a stability strategy A corporation choosing a stability strategy might want as its CEO someone might want as its CEO someone conservative with experience in controlling conservative with experience in controlling budgets, inventories and standardizing budgets, inventories and standardizing procedures – Cautious Profit Plannerprocedures – Cautious Profit Planner

– Weak companies in a relatively attractive Weak companies in a relatively attractive industry tend to turn to a challenge-industry tend to turn to a challenge-oriented executive to save the company – oriented executive to save the company – Turnaround SpecialistTurnaround Specialist

– If a company cannot be saved, a If a company cannot be saved, a professional liquidator might be called on professional liquidator might be called on by a bankruptcy court to close the firm and by a bankruptcy court to close the firm and liquidate its assets.liquidate its assets.

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• Research tends to support the conclusion that as a Research tends to support the conclusion that as a firm’s environment changes, it tends to change the firm’s environment changes, it tends to change the type of top executive to implement new strategytype of top executive to implement new strategy

• Chandler proposes that the most appropriate CEO of Chandler proposes that the most appropriate CEO of a company changes as firm moves from one stage of a company changes as firm moves from one stage of development to another.development to another.

• Other studies found a link between type of CEO and Other studies found a link between type of CEO and a firm’s overall strategic type.a firm’s overall strategic type.– Prospector firms tend to be headed by CEOs from Prospector firms tend to be headed by CEOs from

research/engineering and general management backgroundresearch/engineering and general management background– High performance defenders firms tend to have CEOs from High performance defenders firms tend to have CEOs from

accounting/finance, manufacturing/production and general accounting/finance, manufacturing/production and general managementmanagement

– Analyzers firms tend to have CEOs from marketing/salesAnalyzers firms tend to have CEOs from marketing/sales

• Study of 173 firms over 25 year period revealed that Study of 173 firms over 25 year period revealed that CEOs tended to have same functional specialisation CEOs tended to have same functional specialisation as the former CEO especially if the past CEO’s as the former CEO especially if the past CEO’s strategy continued to be successful.strategy continued to be successful.

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Executive Succession: Executive Succession: Insiders v/s OutsidersInsiders v/s Outsiders

• Executive succession is the process of replacing a key Executive succession is the process of replacing a key top manager.top manager.

• Some companies use relay executive succession in which Some companies use relay executive succession in which a candidate is groomed to take over the CEO position by a candidate is groomed to take over the CEO position by identifying candidates below the top layer, providing identifying candidates below the top layer, providing them with special assignments to ensure the them with special assignments to ensure the development of a comprehensive set of skillsdevelopment of a comprehensive set of skills

• Prosperous firms tend to look outside for CEO candidates Prosperous firms tend to look outside for CEO candidates only if they have no obvious internal candidates.only if they have no obvious internal candidates.

• Hiring an outsider can be risky – tend to introduce Hiring an outsider can be risky – tend to introduce significant change and high turnover among current top significant change and high turnover among current top managementmanagement

• Firms in trouble overwhelmingly choose outsiders to lead Firms in trouble overwhelmingly choose outsiders to lead them.them.

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LeadingLeading

• Implementation also involves leading Implementation also involves leading people to use their abilities and skills people to use their abilities and skills more effectively and efficiently to achieve more effectively and efficiently to achieve organisational objectives.organisational objectives.

• Without direction, people tend to do their Without direction, people tend to do their work according to their personal view of work according to their personal view of what tasks should be done, how and in what tasks should be done, how and in what order – regardless of the what order – regardless of the corporation’s priorities.corporation’s priorities.

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Managing Corporate Managing Corporate CultureCulture

• Organisation’s culture can exert a powerful Organisation’s culture can exert a powerful influence on the behaviour of all employees and influence on the behaviour of all employees and thus can affect a company’s ability to shift its thus can affect a company’s ability to shift its strategic direction.strategic direction.

• Corporate culture has a strong tendency to resist Corporate culture has a strong tendency to resist change because it often rests on preserving change because it often rests on preserving stable relationships and patterns of behaviour.stable relationships and patterns of behaviour.

• A significant change in strategy should be A significant change in strategy should be followed by a modification of the organisation’s followed by a modification of the organisation’s culture.culture.– It may take a long time and require much effort.It may take a long time and require much effort.

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Assessing Strategy-Culture Assessing Strategy-Culture CompatibiltyCompatibilty

• Is the planned strategy compatible with Is the planned strategy compatible with the company’s current culture?the company’s current culture?

• Can the culture be easily modified to Can the culture be easily modified to make it more compatible with the new make it more compatible with the new strategy?strategy?

• Is management willing and able to make Is management willing and able to make major organisational changes and accept major organisational changes and accept probable delays and a likely increase in probable delays and a likely increase in costs?costs?

• Is management still committed to Is management still committed to implement the strategy?implement the strategy?

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Managing Cultural Change Managing Cultural Change through Communicationthrough Communication

• Communicating is key to effective Communicating is key to effective management of change.management of change.

• Rationale for strategic changes should be Rationale for strategic changes should be communicated to workers in newsletters, communicated to workers in newsletters, speeches, in training and development speeches, in training and development programsprograms– Especially in decentralised firms in Especially in decentralised firms in

distant unitsdistant units• For successful major cultural changes:For successful major cultural changes:

– Top management had a vision which was Top management had a vision which was communicated at all levels.communicated at all levels.

– The vision was translated into the key elements The vision was translated into the key elements necessary to accomplish that vision.necessary to accomplish that vision. 16

Motivation and RewardsMotivation and Rewards

• Linking the reward system to Linking the reward system to performance outcomes.performance outcomes.

• A properly designed reward A properly designed reward structure is management’s most structure is management’s most powerful tool for mobilizing powerful tool for mobilizing organizational commitment to organizational commitment to successful strategy execution!successful strategy execution!

• Good Reward SystemGood Reward System• Motivate employeesMotivate employees

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Gaining Commitment: ComponentsGaining Commitment: Componentsof an Effective Reward Systemof an Effective Reward System

Monetary IncentivesMonetary Incentives

– Salary raisesSalary raises

– Performance Performance bonuses bonuses

– Stock optionsStock options

– Retirement packagesRetirement packages

– PromotionsPromotions

– PerksPerks

Non-monetary IncentivesNon-monetary Incentives

– PraisePraise

– Constructive criticismConstructive criticism

– Special recognitionSpecial recognition

– More, or less, job More, or less, job securitysecurity

– Interesting Interesting assignmentsassignments

– More, or less, job More, or less, job responsibilityresponsibility

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Approaches: Motivating PeopleApproaches: Motivating Peopleto Execute the Strategy Wellto Execute the Strategy Well

• Inspire employees to do their bestInspire employees to do their best

• Get employees to buy into strategyGet employees to buy into strategy

• Structure individual efforts in teams to Structure individual efforts in teams to facilitate a supportive climatefacilitate a supportive climate

• Allow employees to participate in Allow employees to participate in decisions about their jobsdecisions about their jobs

• Make jobs interesting and satisfyingMake jobs interesting and satisfying

• Devise strategy-supportive motivational Devise strategy-supportive motivational approachesapproaches

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