Presentation on theme: "Strategic Organization Structure and Human Resource Management (Aligning Organization Structure and Human Resources Management to Business Stratgy)"— Presentation transcript:
1Strategic Organization Structure and Human Resource Management (Aligning Organization Structure and Human Resources Management to Business Stratgy)
2Alignment Framework Business Strategy Organization Structure Human ResourcesManagement“HR systems and the organization structure should be managed in a way that is congruent with organizational strategy (hence the name ‘matching model)”(Fombrun et al, 1984).
3Business Strategy Basic Concept Strategy is the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation ofresources necessary for carrying out these goals.(Chandler, 1962)Business strategy is concerned with the match between the internal capabilities of the company and its external environment.(Kay, 1999)A strategy, whether it is an HR strategy or any other kind of management strategy, must have two key elements: there must be strategic objectives (i.e. things the strategy is supposed to achieve), and there must be a plan of action (i.e. the means by which it is proposed that the objectives will be met).(Richardson and Thompson, 1999)
4Business Strategy Basic Concept The concept of strategy is based on three subsidiary concepts: competitive advantage, distinctive capabilities and strategic fit.Competitive advantage, Porter asserts (1985), arises out of a firm creating value for its customers. To achieve it, firms select markets in which they can excel and present a moving target to their competitors by continually improving their position.Porter emphasized the importance of: differentiation, which consists of offering a product or service ‘that is perceived industry-wise as being unique’; and focus – seeing a particular buyer group or product market ‘more effectively or efficiently than competitors who compete more broadly’. He then developed his well-known framework of three generic strategies that organizations can use to gain competitive advantage. These are:innovation – being the unique producer;quality – delivering high-quality goods and services to customers;cost leadership – the planned result of policies aimed at ‘managing away expense’.
5Business Strategy Basic Concept Distinctive capabilitiesA distinctive capability or competence can be described as an important feature that in Quinn’s (1980) phrase ‘confers superiority on the organization’. Distinctive capabilities or core competences describe what the organization is specially or uniquely capable of doing. Distinctive capabilities are those characteristics that cannot be replicated by competitors, or can only be imitated with great difficulty.Prahalad and Hamel (1990) argue that competitive advantage stems in the long term when a firm builds ‘core competences’ that are superior to its rivals and when it learns faster and applies its learning more effectively than its competitors.Four criteria have been proposed by Barney (1991) for deciding whether a resource can be regarded as a distinctive capability or competency:value creation for the customer;rarity compared to the competition;non-imitability;non-substitutability.
6Business Strategy Basic Concept Strategic fitThe concept of strategic fit states that to maximize competitive advantage afirm must match its capabilities and resources to the opportunities availablein the external environment.As Hofer and Schendel (1986) conclude: ‘A critical aspect of top management’s work today involves matching organizational competences (internal resources and skills) with the opportunities and risks created by environmental change in ways that will be both effective and efficient over the time such resources will be deployed.’
7Business Strategy Basic Concept Craft aStrategyto AchieveObjectivesSetDevelop aStrategicVisionandMissionImplementExecuteImprove/ChangeRevise asNeededRecycleas NeededTask 1Task 2Task 3Task 4Task 5Monitor,Evaluate,and Take CorrectiveActionThe Five Tasks of Strategic Management
8Business Strategy Basic Concept The systematic approach to formulating strategy1. Define the mission.2. Set objectives.3. Conduct internal and external environmental scans to assess internal strengths and weaknesses and external opportunities and threats (a SWOT analysis).4. Analyse existing strategies to determine their relevance in the light of the internal and external appraisal. This may include gap analysis, which will establish the extent to which environmental factors might lead to gaps between what could be achieved if no changes were made and what needs to be achieved. The analysis would also cover resource capability, answering the question: ‘Have we sufficient human or financial resources available now or that can readily be made available in the future to enable us to achieve our objectives?’5. Define in the light of this analysis the distinctive capabilities of the Organization.
9Business Strategy Basic Concept The systematic approach to formulating strategy6. Define the key strategic issues emerging from the previous analysis. These will be concerned with such matters as product-market scope, enhancing shareholder value and resource capability.7. Determine corporate and functional strategies for achieving goals and competitive advantage, taking into account the key strategic issues. These may include business strategies for growth or diversification, or broad generic strategies for innovation, quality or cost leadership; or they could take the form of specific corporate/functional strategies concerned with product-market scope, technological development or human resource development.8. Prepare integrated strategic plans for implementing strategies.9. Implement the strategies.10. Monitor implementation and revise existing strategies or develop new strategies as necessary.
14The Functional Form Advantages Disadvantages Promotes skill specializationReduces duplication of scarce resources and uses resources full timeEnhances career development for specialists within large departmentsFacilitates communication and performance because superiors share expertise with their subordinatesExposes specialists to others within same specialtyEmphasizes routine tasks; encourages short time horizonsFosters parochial perspectives by managers and limits capacity for top-management positionsMultiplies interdepartmental dependencies; increases coordination and scheduling difficultiesObscures accountability for overall results
15The Divisional Organization Basis of Division:ProductCustomerRegional
16The Divisional Form Advantages Disadvantages Recognizes interdepartmental interdependenciesFosters an orientation toward overall outcomes and clientsAllows diversification and expansion of skills/trainingEnsures accountability by departmental managers and promotes delegationHeightens departmental cohesion and involvement in workMay use skills and resource inefficientlyLimits career advancement by specialistsImpedes specialists’ exposure to others within same specialtiesPuts multiple-role demands upon people and creates stressMay promote departmental objectives as opposed to overall organizational goals
18The Matrix Structure Advantages Disadvantages Makes specialized, functional knowledge available to all projectsUse people flexiblyMaintains consistency by forcing communication between managersRecognizes and provides mechanisms for dealing with legitimate, multiple sources of powerCan adapt to environmental changesCan be difficult to implementIncreases role ambiguity, stress, and anxietyPerformance is lowered without power balancing between projects and functionsMakes inconsistent demands and can promote conflict and short-term crisis orientationMay reward political skills over technical skills
20Process-base Structure TopManagementTeamProcessOwnerTeam1Team2Team3MarketAnalysisResearchProductPlanningTestingCustomerNew Product Development ProcessProcessOwnerTeam1Team2Team3CustomerAnalysisPurchasingMaterialFlowDistrib.Procurement and Logistics Process
21Characteristics of Process-Based Structures Processes drive structureWork adds valueTeams are fundamentalCustomers define performanceTeams are rewarded for performanceTeams are tightly linked to suppliers and customersTeam members are well informed and trained
22The Process-Based Form AdvantagesDisadvantagesFocuses resources on customer satisfactionImproves speed and efficiencyAdapts to environmental change rapidlyReduces boundaries between departmentsIncreases ability to see total work flowEnhances employee involvementLowers costs dues to overheadCan threaten middle managers and staff specialistsRequires changes in command-and-control mindsetsDuplicates scarce resourcesRequires new skills and knowledge to manage lateral relationships and teamsMay take longer to make decisions in teamsCan be ineffective if wrong processes are identified
23Hybrid Structure CEO Executive Committee National Companies Germany PowerTransformersPowerGenerationRobots47 OtherBusiness AreasGermanyU.S.ANationalCompaniesNorway137 OtherNationalCompanies
24Hybrid structure The pure types of structure rarely exist Most are hybrids of different kindsCommon hybrid 1: functional and divisionalCommon hybrid 2: functional and horizontalFive Alive: an example of a hybrid structure
26Alfred Chandler’s “structure follows strategy” concept assumes the necessity for organizational structural design changes to meet the demands of strategic goals.
27DIMENSIONS OF ORGANIZATION STRUCTURE Strategy menentukan struktur organisasiStrategy, which determines directionStructure, which determines the location of decision-making powerProcesses, which have to do with flow of informationReward system, which influence the motivation of people to perform and address organizational goalsPeople policies, which influence and define employee’s mindset and skillSTRATEGYPEOPLESTRUCTUREPROCESSESREWARDS
28The Strategic Choice Approach to Organization Design Strategy menentukan struktur organisasi
29Operational excellence DISKUSI KELOMPOKBentuk dua tim kemudian diskusikan dalam masing-masing tim struktur organisasi dibawah ini cocok untuk strategy generic Tracy & Wiersema yang mana?:Product leadershipOperational excellenceCustomer intimacy
33Kerangka alignment Human Resources Management dengan Business Strategy Human Resource Strategy menyelaraskan Human Resource dengan Busniess StrategyKerangka alignment Human Resources Management dengan Business StrategyElemen dari HR Strategy yang nantinya akan didetailkan dalamHuman Resources Management
34Strategic Human Resource Management: Concept and Process
35Strategic Human Resource Management: Definitions Strategic HRM defines the organization’s intentions and plans on how its business goals should be achieved through people. It is based on three propositions: first, that human capital is a major source of competitive advantage; second, that it is people who implement the strategic plan; and, third, that a systematic approach should be adopted to defining where the organization wants to go and how it should get there.Strategic HRM is a process that involves the use of overarching approaches to the development of HR strategies, which are integrated vertically with the business strategy and horizontally with one another.These strategies define intentions and plans related to overall organizational considerations, such as organizational effectiveness, and to more specific aspects of people management, such as resourcing, learning and development, reward and employee relations.
36THE MEANING OF STRATEGIC HRM Strategic HRM focuses on actions that differentiate the firm from its competitors Purcell, 1999). It is suggested by Hendry and Pettigrew (1986) that it has four meanings:the use of planning;a coherent approach to the design and management of personnelsystems based on an employment policy and workforce strategy and often underpinned by a ‘philosophy’;matching HRM activities and policies to some explicit business strategy;seeing the people of the organization as a ‘strategic resource’ for theachievement of ‘competitive advantage’.
37Operational excellence DISKUSI KELOMPOKBentuk dua tim kemudian diskusikan dalam masing-masing tim performance appraisal dibawah ini cocok untuk strategy generic Tracy & Wiersema yang mana?:Product leadershipOperational excellenceCustomer intimacy