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Strategic Organization Structure and Human Resource Management (Aligning Organization Structure and Human Resources Management to Business Stratgy). Alignment Framework. Business Strategy. Organization Structure. Human Resources Management.

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slide1

Strategic Organization Structure and Human Resource Management(Aligning Organization Structure and Human Resources Management to Business Stratgy)

alignment framework
Alignment Framework

Business

Strategy

Organization

Structure

Human Resources

Management

“HR systems and theorganization structure should be managed in a way that is congruent withorganizational strategy (hence the name ‘matching model)”

(Fombrunet al, 1984).

business strategy basic concept
Business Strategy Basic Concept

Strategy is the determination of the basic long-term goals and objectives of anenterprise, and the adoption of courses of action and the allocation of

resources necessary for carrying out these goals.

(Chandler, 1962)

Business strategy is concerned with the match between the internal capabilitiesof the company and its external environment.

(Kay, 1999)

A strategy, whether it is an HR strategy or any other kind of managementstrategy, 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 concept1
Business Strategy Basic Concept
  • The concept of strategy is based on three subsidiary concepts: competitiveadvantage, distinctive capabilities and strategic fit.
  • Competitive advantage, Porter asserts (1985), arises out of a firm creatingvalue for its customers. To achieve it, firms select markets in which they canexcel and present a moving target to their competitors by continually improving their position.
  • Porter emphasized the importance of: differentiation, which consists ofoffering a product or service ‘that is perceived industry-wise as beingunique’; and focus – seeing a particular buyer group or product market ‘moreeffectively or efficiently than competitors who compete more broadly’. Hethen developed his well-known framework of three generic strategies thatorganizations 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 awayexpense’.
business strategy basic concept2
Business Strategy Basic Concept
  • Distinctive capabilities
  • A distinctivecapability or competencecan be described as an important feature that inQuinn’s (1980) phrase ‘confers superiority on the organization’. Distinctive capabilities or core competences describe what the organizationis 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 inthe long term when a firm builds ‘core competences’ that are superior to itsrivals 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 aresource can be regarded as a distinctive capability or competency:
    • valuecreation for the customer;
    • raritycompared to the competition;
    • non-imitability;
    • non-substitutability.
business strategy basic concept3
Business Strategy Basic Concept

Strategic fit

The concept of strategic fit states that to maximize competitive advantage a

firm must match its capabilities and resources to the opportunities available

in the external environment.

As Hofer and Schendel (1986) conclude: ‘Acritical aspect of top management’s work today involves matching organizationalcompetences (internal resources and skills) with the opportunitiesand risks created by environmental change in ways that will be botheffective and efficient over the time such resources will be deployed.’

business strategy basic concept4

Task 1

Task 2

Task 3

Task 4

Task 5

Develop a

Strategic

Vision

and

Mission

Set

Objectives

Craft a

Strategy

to Achieve

Objectives

Implement

and

Execute

Strategy

Monitor,

Evaluate,

and Take Corrective

Action

Revise as

Needed

Revise as

Needed

Improve/

Change

Improve/

Change

Recycle

as Needed

Business Strategy Basic Concept

The Five Tasks of Strategic Management

business strategy basic concept5
Business Strategy Basic Concept

The systematic approach to formulating strategy

1. Define the mission.

2. Set objectives.

3. Conduct internal and external environmental scans to assess internalstrengths and weaknesses and external opportunities and threats (a SWOT analysis).

4. Analyse existing strategies to determine their relevance in the light ofthe internal and external appraisal. This may include gap analysis,which will establish the extent to which environmental factors mightlead to gaps between what could be achieved if no changes were madeand what needs to be achieved. The analysis would also cover resourcecapability, answering the question: ‘Have we sufficient human orfinancial resources available now or that can readily be made availablein 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 concept6
Business Strategy Basic Concept

The systematic approach to formulating strategy

6. Define the key strategic issues emerging from the previous analysis. Thesewill be concerned with such matters as product-market scope, enhancingshareholder value and resource capability.

7. Determine corporate and functional strategies for achieving goals andcompetitive advantage, taking into account the key strategic issues.These may include business strategies for growth or diversification, orbroad generic strategies for innovation, quality or cost leadership; orthey could take the form of specific corporate/functional strategiesconcerned 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.

slide11

TYPES OF

ORGANIZATION STRUCTURE

slide12

Evolusi Bentuk Struktur Organisasi

Hybrid

Process-base

Matrix

Divisional

Functional

the functional form
The Functional Form

Advantages

Disadvantages

  • 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
the divisional organization
The Divisional Organization
  • Basis of Division:
  • Product
  • Customer
  • Regional
the divisional form
The Divisional Form

Advantages

Disadvantages

  • 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
  • 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
the matrix structure
The Matrix Structure

Advantages

Disadvantages

  • 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
  • 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
process base structure
Process-base Structure

Top

Management

Team

Process

Owner

Team

1

Team

2

Team

3

Customer

Market

Analysis

Research

Product

Planning

Testing

New Product Development Process

Process

Owner

Team

1

Team

2

Team

3

Customer

Analysis

Purchasing

Material

Flow

Distrib.

Procurement and Logistics Process

characteristics of process based structures
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
The Process-Based Form

Advantages

Disadvantages

  • 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
slide22

Hybrid Structure

CEO

Executive

Committee

Power

Transformers

Power

Generation

Robots

47 Other

Business Areas

Germany

U.S.A

National

Companies

Norway

137 Other

National

Companies

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
slide25

Alfred Chandler’s “structure follows strategy” concept assumes the necessity for organizational structural design changes to meet the demands of strategic goals.

slide26

DIMENSIONS OF ORGANIZATION STRUCTURE

Strategy menentukan struktur organisasi

  • 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

STRATEGY

PEOPLE

STRUCTURE

PROCESSES

REWARDS

slide27

The Strategic Choice Approach to Organization Design

Strategy menentukan struktur organisasi

diskusi kelompok
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?:

slide29

Chief Executive

Officer

Chief Financial

VP Research

Officer

Product A

Manager

Product B

Manager

Product C

Manager

.

VP Human

VP Operations

VP Sales and

Resources

Marketing

The Divisional Organization

Struktur organisasi diatas cocok untuk

strategy apa?

slide30

Chief Executive

Officer

Chief Financial

VP Research

Officer

Corporate Division

Manager

Retail Division

Manager

..Division

Manager

.

VP Human

VP Operations

VP Sales and

Resources

Marketing

The Divisional Organization

Struktur organisasi diatas cocok untuk

strategy apa?

slide31

Aligning Human Resource

to Business Strategy

slide32

Human Resource Strategy menyelaraskan Human Resource dengan Busniess Strategy

Kerangka alignment Human Resources Management dengan Business Strategy

Elemen dari HR Strategy yang nantinya akan didetailkan dalam

Human Resources Management

strategic human resource management definitions
Strategic Human Resource Management:Definitions

Strategic HRM defines the organization’s intentions and plans on how itsbusiness goals should be achieved through people. It is based on threepropositions: first, that human capital is a major source of competitiveadvantage; second, that it is people who implement the strategic plan; and,third, that a systematic approach should be adopted to defining where theorganization wants to go and how it should get there.

Strategic HRM is a process that involves the use of overarchingapproaches to the development of HR strategies, which are integratedvertically with the business strategy and horizontally with one another.

These strategies define intentions and plans related to overall organizationalconsiderations, such as organizational effectiveness, and to morespecific aspects of people management, such as resourcing, learning anddevelopment, reward and employee relations.

the meaning of strategic hrm
THE MEANING OF STRATEGIC HRM
  • Strategic HRM focuses on actions that differentiate the firm from itscompetitors 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 personnelsystemsbased on an employment policy and workforce strategy andoften 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 kelompok1
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?: