HRM544/Sept2014/sn 1

CHAPTER 3
Performance
Management and
Strategic Planning
HRM541
PERFORMANCE
MANAGEMENT
HRM544/Sept2014/sn 2
Overview
1. How performance management works
2. Definition and Purposes of Strategic Planning
3. Linking Performance Management to the Strategic
Plan
Strategic Planning
Developing Strategic Plans at the Unit Level
Job Descriptions
Individual and Team Performance
4. Building Support
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How Performance Management Works
The basis upon which performance
management works as a continuous
process is illustrated in the performance
management cycle

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Strategic Planning: Definition
A process
Describe organizations destination
Assess barriers
Select approaches for moving
forward

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Strategic Planning: Main Goal
Allocate resources to provide
organization with competitive
advantage.
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Strategic Planning: Purposes
1. Help define the organizations identity
Who are we?
What are our purposes?
2. Help organization prepare for the future
It clarifies the desired destination.
Plan how to get there.
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Strategic Planning: Purposes
3. Enhance ability to adapt to
environmental change
Enhance ability to adapt environmental changes
and anticipate future changes (possible
adaptation)
4. Provide focus and allow for better
allocation of resources
Improved resource allocations stimulate growth
and improve profitability.
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Strategic Planning: Purposes
5. Produce an organizational culture of
cooperation
Because of common goals setting
Gain competitive advantage (a condition or
circumstance that puts a company in a favorable
or superior business position)
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Strategic Planning: Purposes
6. Allow for the consideration of new
options and opportunities
Ex expanding new markets, offering new
products
7. Provide employees with information
to direct daily activities
Identifies important behaviors and results to be
used in the PM system
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Strategic Planning : Overview
1. Environmental Analysis
2. Mission
3. Vision
4. Goals
5. Strategies
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1. Environmental Analysis
Identifies external and internal trends
To understand broad industry issues
To make decisions using big picture
context
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External trends
Opportunities:
environmental characteristics that can help the
organization succeed
ex. Markets not currently served, new technology
advances
Threats:
environmental characteristics that can prevent the
organization from being successful
ex. Economic recession, innovative products of
competitors
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External trends Factors to Consider
Economic (ex.
Recession)
Political/Legal (ex.
Political change)
Social (ex. Aging
workforce)
Technological (ex.
Technological changes)


Competitors (ex.
Competitors strategies,
products, next move)
Customers (ex. Needs
and anticipations)
Suppliers (ex. Current
& future relationship)
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Internal trends
Strengths:
internal characteristics that the organization can use
for its advantage
Ex. Organizational assets, staffs key skills
Weaknesses:
internal characteristics that can hinder the success
of the organization
Ex. Obsolete organizational structure
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Internal trends Factors to Consider
Organizational structure (ex. Current structure fast/slow, condusive
or not with effective communication)
Organizational culture (ex. Encourage/hinder innovation &
entrepreneurial behaviors)
Politics (ex. Cross-unit collaboration is virtually
possible/impossible, unit collaborations in cross-unit projects)
Processes (ex. Customers receive fast/slow response, supply chain
working/not working properly)
Size (ex. Organization size too big/small, growing too slow/fast,
manage growth effectively/ineffectively)
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Gap Analysis
Analyzes:
External environment
(opportunities and threats)
vis--vis
Internal environment
(strengths and weaknesses)
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Gap analysis determines:
1. Opportunity + Strength = Leverage

2. Opportunity + Weakness = Constraint

3. Threat + Strength = Vulnerability

4. Threat + Weakness = Problem
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2. Mission
A good mission statement answers:
1. Why does the organization exist?
2. What is the scope of the organizations
activities?
3. Who are the customers served?
4. What are the products or services
offered?

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Mission Statement contains:
Information on organizations:
Basic product/service to be offered
Primary market/customer groups
Unique benefits and advantages of
product/services
Technology to be used
Concern for survival through growth and
profitability
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Mission Statement may contain:
Information on organizations values and
beliefs:
Managerial philosophy
Public image sought by organization
Self-concept of business adopted by
Employees
Stockholders
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3. Vision
1. Statement of future aspirations
2. Focuses attention on what is important
3. Provides context for evaluating
Opportunities
Threats
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A Good Vision Statement:
1. Brief
2. Verifiable
3. Bound by a Timeline
4. Current
5. Focused
6. Understandable
7. Inspiring
8. A stretch
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4. Goals
Purposes for Setting Goals
Formalize expected achievements
Provide motivation
Provide tangible targets
Provide basis for good decisions
Provide basis for performance
measurement
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5. Strategies
Create strategies or Game Plans or 'How to'
procedures to address issues of:
Growth
Survival
Turnaround
Stability
Innovation
Leadership
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How the HR Function contributes:
1. Communicate knowledge of strategic
plan
2. Provide knowledge of KSAs needed
for strategy implementation
3. Propose reward systems
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Alignment of Strategic Plan with Performance
Organizations Strategic Plan
Mission, Vision, Goals, Strategies

Individual and Team Performance
Results, Behaviors, Developmental Plan

Job Description
Tasks, KSAs

Units Strategic Plan
Mission, Vision, Goals, Strategies

Critical to involve all levels of management
Critical to involve all employees
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Strategic Plans at the Unit Level
Organization Mission statement, Vision
statement, Goals, and Strategies
Must clearly align with
And be congruent with
Every Unit Mission statement, Vision
statement, Goals, and Strategies
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Job Descriptions
Tasks and KSAs are congruent with
Organization and Unit strategic plans
Activities described support mission
and vision of Organization and Unit
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Individual and Team
Performance
Organization and Unit mission, vision,
goals lead to
Performance management system,
which
Motivates employees
Aligns development plans with
organization priorities
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Strategic Plan: 6 Choices in PM System
Design
1. Criteria (Behavior vs. Results)
2. Participation (Low vs. High)
3. Temporal Dimension (Short Term vs. Long Term)
4. Level of Criteria (Individual vs. Team/Group)
5. System Orientation (Developmental vs.
Administrative)
6. Rewards (Pay for Performance vs.
Tenure/Position)
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Building Support

Top Management:
Help carry out vision
All levels:
Involvement
Participation
Understanding