Strategic Organization Structure and Human Resource Management (Aligning Organization Structure and Human Resources Management to Business Stratgy)
Feb 25, 2016
Strategic Organization Structure and Human Resource
Management
(Aligning Organization Structure and Human Resources Management to Business Stratgy)
Alignment FrameworkBusinessStrategy
OrganizationStructure
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).
Business 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)
Business Strategy Basic ConceptThe 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’.
Business 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.
Business 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.’
Craft aStrategy
to AchieveObjectives
SetObjectives
Develop aStrategic
Visionand
Mission
Implementand
ExecuteStrategy
Improve/Change
Revise asNeeded
Revise asNeeded
Improve/Change
Recycleas Needed
Task 1 Task 2 Task 3 Task 4 Task 5
Monitor,Evaluate,and Take
CorrectiveAction
Business Strategy Basic Concept
The Five Tasks of Strategic Management
Business Strategy Basic ConceptThe systematic approach to formulating strategy
1. 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.
Business Strategy Basic ConceptThe systematic approach to formulating strategy
6. 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.
ORGANIZATION STRUCTURE
TYPES OF ORGANIZATION STRUCTURE
Functional
Divisional
Matrix
Process-base
Hybrid
Evolusi Bentuk Struktur Organisasi
The Functional Form
• Promotes skill specialization• Reduces duplication of scarce
resources and uses resources full time
• Enhances career development for specialists within large departments
• Facilitates communication and performance because superiors share expertise with their subordinates
• Exposes specialists to others within same specialty
Emphasizes routine tasks; encourages short time horizons
Fosters parochial perspectives by managers and limits capacity for top-management positions
Multiplies interdepartmental dependencies; increases coordination and scheduling difficulties
Obscures accountability for overall results
Advantages Disadvantages
The Divisional Organization
Chief FinancialOfficer
VP Research
Division M anagerAsia
VP Hum anResources
VP Operations VP Sales andM arketing
Division M anagerNorth Am erica
Division M anagerEurope
Chief ExecutiveOfficer
Basis of Division:-Product- Customer- Regional
The Divisional Form
• Recognizes interdepartmental interdependencies
• Fosters an orientation toward overall outcomes and clients
• Allows diversification and expansion of skills/training
• Ensures accountability by departmental managers and promotes delegation
• Heightens departmental cohesion and involvement in work
Advantages May use skills and resource
inefficiently Limits career advancement by
specialists Impedes specialists’ exposure to
others within same specialties Puts multiple-role demands upon
people and creates stress May promote departmental
objectives as opposed to overall organizational goals
Disadvantages
VP Finance VP Hum an Resources
Program M anagerAircraft
Program M anagerNavigation System s
Program M anagerSpace System s
Senior VPProgram s
VP Research VP Engineering VP M anufacturing VP M arketing
Senior VPOperations
PresidentCEO
The Matrix Organization
The Matrix Structure
• Makes specialized, functional knowledge available to all projects
• Use people flexibly• Maintains consistency by forcing
communication between managers
• Recognizes and provides mechanisms for dealing with legitimate, multiple sources of power
• Can adapt to environmental changes
Advantages Can be difficult to implement Increases role ambiguity, stress,
and anxiety Performance is lowered without
power balancing between projects and functions
Makes inconsistent demands and can promote conflict and short-term crisis orientation
May reward political skills over technical skills
Disadvantages
The Process-Based Structure
Developing New Products ProcessP rocess O wn er
C ros s F u n c tion a l Team M em b ers
Acquiring and Filling Custom er Orders ProcessP rocess O wn er
C ros s F u n c tion a l Team M em b ers
Supporting Custom er Usage ProcessP rocess O wn er
C ros s F u n c tion a l Team M em b ers
Senior M anagem ent T eamC h air an d K ey S u p p ort P rocess O w n ers
Process-base Structure
Team3
Team2
Team1
TopManagementTeam
Team3
Team2
Team1
Customer
Customer
ProcessOwner
ProcessOwner
Testing Product Planning Research Market
Analysis
New Product Development Process
Distrib. Material Flow Purchasing Analysis
Procurement and Logistics Process
Characteristics of Process-Based Structures
· Processes drive structure · Work adds value· Teams are fundamental· Customers define performance· Teams are rewarded for performance· Teams are tightly linked to suppliers and customers· Team members are well informed and trained
The Process-Based Form
• Focuses resources on customer satisfaction
• Improves speed and efficiency• Adapts to environmental change
rapidly• Reduces boundaries between
departments• Increases ability to see total
work flow• Enhances employee involvement• Lowers costs dues to overhead
Can threaten middle managers and staff specialists
Requires changes in command-and-control mindsets
Duplicates scarce resources Requires new skills and
knowledge to manage lateral relationships and teams
May take longer to make decisions in teams
Can be ineffective if wrong processes are identified
Advantages Disadvantages
ExecutiveCommittee
PowerTransformers RobotsPower
Generation
Germany
U.S.A
Norway
NationalCompanies
CEO
137 OtherNationalCompanies
47 OtherBusiness Areas
Hybrid Structure
Hybrid structure
• The pure types of structure rarely exist• Most are hybrids of different kinds• Common hybrid 1: functional and divisional• Common hybrid 2: functional and horizontal• Five Alive: an example of a hybrid structure
Aligning Organization StructureTo
Business Strategy
Alfred Chandler’s “structure follows strategy” concept assumes the necessity for organizational structural design changes to meet the demands of strategic goals.
STRATEGY
DIMENSIONS OF ORGANIZATION STRUCTURE Strategy, which determines direction
Structure, which determines the location of decision-making power
Processes, which have to do with flow of information
Reward system, which influence the motivation of people to perform and address organizational goals
People policies, which influence and define employee’s mindset and skill
REWARDS PROCESSES
STRUCTUREPEOPLE
Strategy menentukan struktur organisasi
The Strategic Choice Approach to Organization Design
Strategy menentukan struktur organisasi
DISKUSI KELOMPOK
• Product leadership• Operational excellence
• Customer intimacy
Bentuk dua tim kemudian diskusikan dalam masing-masing tim struktur organisasi dibawah ini cocok untuk strategy generic Tracy & Wiersema yang mana?:
The Divisional Organization
Chief FinancialOfficer
VP Research
Product A Manager
VP HumanResources
VP Operations VP Sales andMarketing
Product B Manager.
Product CManager
Chief ExecutiveOfficer
Struktur organisasi diatas cocok untuk strategy apa?
The Divisional Organization
Chief FinancialOfficer
VP Research
Corporate Division Manager
VP HumanResources
VP Operations VP Sales andMarketing
Retail DivisionManager.
..DivisionManager
Chief ExecutiveOfficer
Struktur organisasi diatas cocok untuk strategy apa?
Aligning Human Resource to
Business Strategy
Human Resource Strategy menyelaraskan Human Resource dengan Busniess Strategy
Elemen dari HR Strategy yang nantinya akan didetailkan dalamHuman Resources Management
Kerangka alignment Human Resources Management dengan Business Strategy
Strategic Human Resource Management: Concept and Process
Strategic 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.
THE 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’.
DISKUSI KELOMPOK
• Product leadership• Operational excellence
• Customer intimacy
Bentuk dua tim kemudian diskusikan dalam masing-masing tim performance appraisal dibawah ini cocok untuk strategy generic Tracy & Wiersema yang mana?:
DISKUSI KELOMPOK
Tahun:Bobot Target Pencapaian Nilai Nilai Terbobot Keterangan65%
1 Budget variance 20%2 % reject 15%3 Jumlah produksi 15%4 Waktu setup 15%
35%1 Setup mesin 10%2 Quality management 5%3 Penjadwalan produksi 5%4 Kerja kelompok 5%5 Manajemen biaya 10%
Total Nialai:
A. Pencapaian target perusahaan
B. Kompetensi
Indikator Penilaian
PT. JAYA CABINETFORMULIR PERFORMANCE APPRAISAL
Nama Pegawai: Nama Atasan Pegawai:
DISKUSI KELOMPOK
Tahun:Bobot Target Pencapaian Nilai Nilai Terbobot Keterangan65%
1 On time delivery 20%2 % reject 15%3 % order bisa dibuat 15%4 Keakuratan design 15%
35%1 CAD/CAM/CAE 10%2 Manufacturing process 5%3 Project management 5%4 Kerja kelompok 5%5 Manajemen waktu 10%
Total Nialai:
A. Pencapaian target perusahaan
B. Kompetensi
Indikator Penilaian
PT. JAYA CABINETFORMULIR PERFORMANCE APPRAISAL
Nama Pegawai: Nama Atasan Pegawai: