Introduction to Management Chapter 5. SWOT Analysis SWOT Analysis can be defined as a planning exercise in which managers identify internal organizational.

Introduction to ManagementChapter 5

SWOT Analysis

SWOT Analysis can be defined as a planning exercise in which managers identify internal organizational Strengths (S) and Weaknesses (W) and external environmental Opportunities (O) and Threats (T).

SWOT Analysis

Based on a SWOT Analysis, managers at the different levels of the organization select the corporate, business and functional level strategies to best position the organization to achieve its mission and goals.

SWOT Analysis - StepsThe first step in SWOT

Analysis is to identify an organization's strengths and weaknesses.

The task facing managers is to identify the strengths and weaknesses that characterize the present state of the organization.

SWOT Analysis - StepsThe second step in SWOT Analysis begins

when managers embark on a full-scale SWOT planning exercise to identify potential opportunities and threats in the environment that affect the organization at the present or may affect it in the future.

Importance of SWOT AnalysisWith the SWOT Analysis completed, and

strengths, weaknesses, opportunities and threats identified, managers can continue the planning process and determine specific strategies for achieving the organization's mission and goals. The resulting strategies should enable the organization to attain its goals by taking advantage of opportunities, countering threats, building strengths and correcting organizational weaknesses.

Importance of Social ResponsibilityThe way a company's managers and

employees view their duty or obligation to make decisions that protect, enhance and promote the welfare and well-being of stakeholders and society as a whole. Without being socially responsible, the company builds up a bad reputation and loses important clients.

AuthorityAuthority is the power to hold people

accountable for their actions and to make decisions concerning the use of organizational resources.

The hierarchy of authority is an organization's chain of command - the relative authority that each manager has. Every manager, at every level of the hierarchy, supervises one or more subordinates.

Centralization Vs Decentralization of Authority

Centralization: The concentration of authority at the top of the managerial hierarchy.

Decentralization: Giving lower-level managers and non-managerial employees the right to make important decisions about how to use organizational resources.

Centralization Vs Decentralization of Authority

Decentralizing authority allows an organization and its employees to behave in a flexible way even as the organization grows and becomes taller. BUT, too much decentralization has certain disadvantages:

a) If division, functions, or teams are given too much decision-making authority, they may begin to pursue their own goals at the expense of organizational goals.

Centralization Vs Decentralization of Authority

b) Also too much decentralization can result in a lack of communication among functions or divisions.

Top managers must seek the balance between centralization and decentralization of authority!

HUMAN RESOURCE MANAGEMENT

Activities that managers engage in to attract and retain employees and to ensure that they perform at a high level and contribute to the accomplishment of organizational goals.

Components/Functions of HRM System

• Recruitment and Selection

• Training and Development

• Labor and Benefits

• Pay and Benefits

• Performance Appraisal and Feedback

Recruitment and SelectionRecruitment: Activities that managers engage

in to develop a pool of qualified candidates for open positions.

Selection: The process that managers use to determine the relative qualifications of job applicants and their potential for performing well in a particular job.

Important Activities of Recruitment and Selection1) Human Resource Planning: Activities that

managers engage in to forecast their current and future needs for human resources.

2) Job Analysis: Second important activity where HR department is identifying the tasks, duties and responsibilities that make up a job and the knowledge, skills and abilities needed to perform the job.

Important Activities of Recruitment and SelectionA job analysis can be done in a number of ways, including

observing current employees as they perform the job or interviewing them. Often managers rely on questionnaires compiled by jobholders and their managers.

After managers have completed human resource planning and job analyses for all jobs in an organization, they will know their human resource needs and the jobs they need to fill. They also know the knowledge, skills, and abilities that potential employees need to perform those jobs. At this point, recruitment and selection can begin.

Important Activities and Recruitment Selection

3) External and Internal Recruitment:

External: When managers recruit externally to fill open positions, they look outside the organization for people who have not worked for the organization previously.

Means for external recruitment: advertisements in newspapers, magazines and websites, career fairs at colleges etc.

Important Activities and Recruitment Selection

Internal: When recruiting is internal, managers turn to existing employees to fill open positions. Employees recruited internally are either seeking lateral moves (job changes that entail no major changes in responsibility or authority levels) or promotions.

Advantages of internal recruitment:

• Internal applicants are already familiar with the organization.

Important Activities and Recruitment Selection

• Managers already know the candidates; they have considerable information about their skill, abilities and behavior at work.

• Internal recruitment can help boost levels of employee motivation and morale, both for the employee who gets the job and for other workers.

• Finally, internal recruiting is normally less time-consuming and expensive than external recruiting.

Important Activities and Recruitment Selection4) The Selection Process:

Once managers develop a pool of applicants for open positions through the recruitment process, they need to find out whether each applicant is qualified for the position and likely to be a good performer.

Important Activities and Recruitment SelectionThe selection process has several selection

tools to help sort out the relative qualifications of job applicants and appraise their potential for being good performers in a particular job.

Selection Tools:

a) Background Information

b) References

c) Paper-and-Pencil Tests (Ability and Personality Tests)

Important Activities and Recruitment Selectiond) Physical Ability Tests (eg for firefighters)

e) Performance Tests (Performance on actual job tasks)

f) Interviews (Structured interview: Managers ask each applicant the same standard questions. Unstructured interview: Proceeds more like an ordinary interview.)

TrainingTraining: Teaching organizational members how to

perform their current jobs and helping them acquire the knowledge and skills they need to be effective performers.

Types of Training:

a) Classroom Instruction: Through classroom instruction, employees acquire knowledge and skills in a classroom setting. This instruction can take place within the organization or outside it, such as courses at local colleges and universities.

Trainingb) On-the-job Training: Learning occurs in the

work setting as employees perform their job tasks. This kind of training can be provided by coworkers or supervisors or can occur simply as jobholders gain experience and knowledge from doing the work.

DevelopmentDevelopment: Building the knowledge and skills

of organizational members so that they are prepared to take on new responsibilities and challenges.

Types of Development(Beside the two types of training mentioned before):

a) Varied Work Experiences :Top Managers need to develop an understanding of, and expertise in, a variety of functions, products and services, and markets.

DevelopmentTo develop executives who will have this

expertise, managers frequently make sure that employees with high potential have a wide variety of different job experiences. This can broaden employees' horizons and help them think more about the big picture.

b) Formal Education: Many large organizations reimburse employees for tuition expenses they incur while taking college courses and obtaining advanced degrees.

Performance Appraisal and Feedback

Performance Appraisal: The evaluation of employees' job performance and contributions to their organization.

Performance Feedback: The process through which managers share performance appraisal information with subordinates, give subordinates an opportunity to reflect on their own performance and develop, with subordinates, plans for the future.

Performance Appraisal and FeedbackTypes of Performance Appraisal:

a) Trait Appraisals: Managers assess subordinates on personal characteristics that are relevant to job performance like skills.

b) Behavioral Appraisals: Managers assess how workers perform their jobs - the actual actions and behaviors that workers exhibit on the job.

c) Result Appraisals: For some jobs, how people perform the jobs is not as important as what they accomplish or the results they obtain.

Performance Appraisal and Feedbackd) Objective and Subjective Appraisals:

Whether managers appraise performance in terms of traits, behaviors or results the information they assess is either objective or subjective. Objective appraisals are based on facts and are likely to be numerical, Subjective appraisals are based on manager's perceptions of traits, behaviors or results.