“An Overview of the Strategic Management; Concepts & Process”

1. “An Overview of the Strategic Management; Concepts & Process” by Sheikh Naseer-ul-Haq M.A. (Economics), MS Dev. Mgt (USA), PA & AS Former Director General, National Institute of Management Former Additional Secretary, Establishment Division Former Deputy Auditor-General of Pakistan

2. MODULE OBJECTIVES • The main objectives of the module are:- • To help the students understand the “Strategic Management” Concepts and processes by highlighting key terms and steps of i) Strategy formulation ii) Strategy implementation iii) Strategy evaluation; • To identify the ever-changing, dynamic and challenging Organizational environment of 21st Century • To help the students understand the characteristics of an effective organization; and to make them aware of the steps required to achieve organizational effectiveness in a 21st Century dynamic managerial environment

3. Strategic Management; Definition • Strategic Management can be defined “as the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives”. (Fred R. David) • As the definition implies Strategic Management focuses on integrating various departmental units like Production/Operations, Marketing/Sales, Finance/Accounting, Research & Development, IT based Management Information Systems to achieve organizational success, goals and objectives

4. Stages of Strategic Management • The Strategic Management process consists of three stages; • Strategy Formulation • Strategy Implementation • Strategy Evaluation

5. Strategy Formulation • Strategy formulation includes; • Developing an organizational “Vision” and “Mission” • Identifying an organization’s external “Opportunities” and “Threats” • Determining internal “Strengths” and “Weaknesses” • Establishing long term “Objectives” • Generating alternative “Strategies” (courses of action) • Choosing particular “Strategies to pursue”

6. Strategy Formulation….cont. • Strategy formulation issues include deciding; • What businesses to enter • What businesses to abandon • How to allocate resources (department-wise) • Whether to expand operations or to diversify • Whether to enter international markets • Whether to merge or form a joint venture • How to ovoid a hostile takeover

7. Strategy Implementation • Strategy Implementation includes; • Establishing “Annual Objectives” • Develop “Policies” supporting new initiatives • Motivate employees to pursue renewed objectives • Allocate resources so that formulated strategies can be executed • Promote “Organizational Culture” supportive of the change direction management

8. Strategy Implementation…cont. • Create effective organizational structures • Redirect market efforts • Prepare budgets for the change management • Develop and utilize effective “MIS” • Link “Employee Compensation to Organizational Performance” Strategy Implementation is “Action Stage”; most difficult stage in Strategic Management

9. Strategy Evaluation • Strategy Evaluation includes; • Reviewing external and internal factors that are the bases for current strategies • Measuring performance; (Macro and Micro) • Taking corrective action where needed Strategy evaluation is extremely important to know the results of “Strategy Implementation”; success or failure

10. Other Critical variable of Strategic Management • Integrating Intuition with Analysis • Adapting to Change; pro-actively managing change externally and internally • Managing Information Technology; e-business and e-commerce • Managing the natural environment • Surviving in the “Global Context”

11. Key Terms in Strategic Management • Competitive Advantage • Strategists • Vision and Mission Statements • Business ethics and Social Responsibility • Operations Management • Transition Management

12. ORGANIZATIONAL GOALS AND RELATIONSHIPS Subject Overview • What is an Organization by “Definition” ? • What are the environmental “Challenges of the 21st Century” for an organization ? • What are its Strategic Planning/Management capabilities to effectively meet these challenges ? • How it sets the “Goals & Targets; Long term & in the Short run” to achieve its “Organizational Objectives” ? • What are its “internal & external relationships” that are critical to its “effectiveness”

13. Organization; Definitions • Definitions • Organization is a System of consciously coordinated activities or forces of two or more persons who get together and formally agree to combine their efforts for a common goals; (Chester Barnard around 1940) • An Organization is a “Structured Process” in which “individuals interact” for the attainment of “Collective Objectives”; (H.R.Hicks around 1970) • Organizations are “Social Inventions” for accomplishing “Common Goals” through “Group Effort”; (Gary Johns around 1990)

14. Organizational Environment; Internal • Whatever resides within the System • Structure and Design • People; the Management & the Workforce • State-of-the-Art; its level of professional work processes • Technology Architecture • Systems and Procedure • Leadership; the Management Philosophy/Approach • Total Organizational Culture

15. Organizational Environment; External • With whoever the Organization interacts at the “Task” level and in “General” • External “Task Environment” • External “General Environment” • The Clients, the Customers, the Suppliers, the Regulatory Agencies, the Competitors, the Special Interest Groups constitute the “External Task Environment” • The Political, the Legal, the Social, the Economic, the Technological or even the International factors affect the “General External Environment” of the Organization

16. Organizational Environment The Organization; structure, Its people, technology, Systems, management Philosophy & Culture The Political, legal, economic, Social, technological, International factors The customers, clients, suppliers, The competitors, special interest groups Regulatory agencies etc.

17. Major 21st Century Challenges for Organizations • Intense Competition (Bench marking) • Globalization • Information Technology (IT) Management • Workforce Diversity/Morale • Change Management • Total Quality Management (TQM) • Social Responsibility & Ethics

18. Process of Organization Development Organizational Strategic Planning/ Management Capabilities This is the Place where you want be. Vision Mission Objectives Strategies Interventions Future State This is the Place where you are. Transition Management Present State

19. PROCESS OF STRATEGIC PLANNING & MANAGEMENT FUTURE STATE STRATEGIC PLANNING/ MANAGEMENT CAPABILITIES PRESENT STATE TRANSITION MANAGEMENT OPERATION’S MANAGEMENT

20. ANALYSIS OF THE PRESENT & THE FUTURE STATE; and THE WAY FORWARD • Vision of the Organisational future state • Clear Perception of the organisational present state with deficiencies & gaps (Knowledge, Skills and Abilities) • Analysis of the organisational Present Strengths, Weaknesses, Opportunities and Threats (SWOT Analysis) • Develop the Way Forward; the Mission, the Objectives, the Strategies and the Interventions

21. Strategic Planning/Management Capacity of the Institution • Build on all organisational Strengths • Challenge, combat and remove all organisational weaknesses and endeavour to convert them into strengths • Capitalise on all organisational Opportunities • Face all organisational Threats with courage, capability and sagacity to convert them ultimately as opportunities

22. Organizational Change Characteristics • WORLD-CLASS ORGANIZATIONS Today the very best Multi-National Corporations are going beyond even the learning organization and have become what can be called as “World-class organizations (WCOs)” which are enterprises that are able to compete with anybody, anywhere, anytime, anyway. (Fred Luthans)

23. Analysis Focal Point (Step-1) Visualise the future state in terms of :- • State-of-the Art (Professional expertise) • Technology Architecture (Hardware/Software) • Management philosophy and Approach • Organisational Structure and Design • Systems and Procedures • Total Organisational Culture

24. Analysis Focal Point (Step-2) • Analyse the present state in terms of the change parameters identified during step-1 with the following broad criteria in view:- • Openness; towards all organisational issues • Critique; everything, no sacred cows • Creativity; analyse all situations with creative inputs & • Personal Efficacy; the confidence among organisational members to carve their own destiny

25. Clear Perception & Assessmentof the Organisational Change Parameters • As a result of visualising the future state and the analysis of the present state, a clear perception & assessment of the organisational dynamics of the change process would be developed; on the basis of which ‘Strategic Action Planning’ exercise could be carried out to meet future challenges

26. Analysis Focal Point (Step-3) • Keeping in view the results of the SWOT ANALYSIS, and the dynamics of the Change as perceived; the “Organization” is now in a position to determine its “Long term and Short run Goals & Targets” • Draw its Strategies to bring about and manage Change • Use different “Interventions/Projects” to implement its change process and to transform its “Vision” into “Action/Reality”

27. Organizational Goals & Objectives • Goals & Objectives • Goals provide a clear, engaging sense of direction and specify what is going to be accomplished • Objectives outline the desired results to be attained/achieved (Management Challenges in the 21st Century by Pamela, Goodman & Fandt) • Goals are quite often broken up into “Targets/Milestones” over a period of time

28. SMART; Goals & Targets SMART • Specific • Measurable • Achievable • Realistic; & • Time bound Goals and Targets provide the Organization with the clear sense of “Direction and what is going to be accomplished over a stated period of Time; Long term or in the Short run”

29. Goal Setting; a dynamic exercise • Goal setting is a structured process of determining the “Long term and Short run Objectives of the Organization” by specifying the desired outcomes toward which individuals, groups, departments, and organizations should work to achieve “organizational efficiency and effectiveness”

30. Management By Objectives (MBO) • Given by Peter Drucker in 1954 • Considered to be the “Management Technique of the 20th Century” • Effectively and successfully being used around the world by Multi-National Corporations, Governments for setting Objectives, Goals and Targets • It is a four step process in which Objectives are set at three levels; the Corporate, the Departmental and the Individual level

31. Management By Objectives (MBO) • Objectives are Negotiated between Supervisor and the Subordinate; written down for a time period • Action Plans and Management Guides are developed to achieve these objectives and • Periodic Review is carried out and final Evaluation at the end of the stated period completes the process • Bench marks for Quality are observed and all compensations are linked to job performance

32. Organizational Relationships 6 Box Model Of Organizational Diagnosis by Marvin Weisbord Purpose Structure Relationships Leadership Rewards Helping Mechanisms Organizational Environment

33. Organizational Relationships Mckinsey’s 7 S Model For Strategy implementation Structure Systems Strategy Subordinate Goals Style Skills Staff

34. Japanese Management Style • Life time employment • Organizational Commitment among its workforce • Training and skill development • Respect for seniority • Management philosophy based on core values of Ethics, honour and Credibility • Family type Organizational Culture

35. HUMAN RESOURCE MANAGEMENT Definitions • The process of developing, applying, and evaluating policies, procedures, methods, and programs relating to the individual in the organization. (Miner) • Function in the organization concerned with the staffing, training, development, motivation and maintenance of employees. (Decenzo)

36. HRM IN A DYNAMIC ENVIRONMENT Environmental Factors and their HRM implications • Globalization:The introduction and making of goods and services worldwide. • Cultural Environments: The attitude and perspectives shared by individuals from specific countries that shape their behavior and how they view the world.

37. HRM IN A DYNAMIC ENVIRONMENT (Contd.) • Work-Force Diversity The varied personal characteristics that make the work force heterogeneous. • Changing Skills Requirements The lacking of basic abilities to perform many of today’s jobs. • Corporate Downsizing An activity in an organization aimed at creating greater efficiency by eliminating certain jobs.

38. HRM IN A DYNAMIC ENVIRONMENT (Contd.) • The Rationale Behind Downsizing Making the organization leaner, smarter, reducing the overheads and bringing efficiency/effectiveness among the employees through self-management/ empowerment • Total Quality Management A continuous process of Quality improvement • Reengineering Work Processes for Improved Productivity Requires Radical, quantum change in perception of the organizational workforce

39. HRM IN A DYNAMIC ENVIRONMENT (Contd.) • The Contingent Work Force The part-time, temporary, and contract workers used by organizations to fill peak staffing needs, or perform work unable to be done by regular employees. • Decentralized Work Sites Work sites that exist away from an organization’s facilities. A management culture that brings about Employee Involvement by affording them more delegation, participative management, work teams, goal setting and training.

40. Dynamics of the HRM Process Selection Training Recruitment Compensation (Pay for Performance) Career Planning Vacancies Performance Appraisal Separation

41. CRITICAL ISSUES IN PUBLIC SERVICE HRM PROCESS • An Evaluation of the critical HRM variables in terms of the Johari’s window:- OK NOT OK CHANGEABLE NOT CHANGEABLE STRATEGIC INTERVENTIONS:- LET US FOCUS ON “NOT OK BUT CHANGEABLE” PARAMETERS IN HRM CYCLE TO EFFECT THE KEY RESULT AREAS (KRA)

42. REQUIRED STRATEGIC/CRITICAL INTERVENTIONS IN HRM PROCESS A PLANNED SYSTEMS CHANGE IS REQUIRED IN THE FOLLOWING HRM AREAS • RECRUITMENT/SELECTION • TRAINING • CAREER PLANNING/PLACEMENT • PERFORMANCE APPRASIAL • COMPENSATION THROUGH A STRUCTURED PROCESS OF CIVIL SERVICE REFORMS THE ABOVE STRATEGIC/CRITICAL INTERVENTIONS ARE PART OF A FIVE YEAR “PUBLIC SECTOR CAPACITY BUILDING PROJECT” IN THE COMPONENT OF ESTABLISHMENT DIVISION LAUNCED BY GOVT OF PAKISTAN IN 2004; but what has it achieved???

43. FOCUSED CIVIL SERVICE TRAINING • “Orientation to public service” focus in the pre-service training at Civil Service Academy. • “Professionalism” at the specialized training institution. • Advancement of Knowledge, Skills & Abilities; and Attitudinal change perspective at the Mid Career Management Course (MCMC) • Senior Management Course for B-19 officers at Senior Management College, Lahore with a focus on “POLICY IMPLEMENTATION” in Public Service. • Training at the National Management College and National Defence University for B-20 officers to focus on “Capacity building for public policy formulation and development options”. • Training of the selected personnel through technical assistance programs abroad

44. CAREER PLANNING/PLACEMENT • BASED ON: “MAN FOR THE JOB” AND NOT “JOB FOR THE MAN” • JOB DESCRIPTION MATCH JOB SPECIFICATION DESCRIBE THE JOB REQUIRED KNOWLEDGE CONTENT SKILLS, ABILITIES, APTITUDE, EXPERIENCE AND BACKGROUNG REQUIRED FOR THE JOB.

45. COMPENSATION • ANY EFFORT AT CHANGE WOULD LACK IMPEUTS WITHOUT ADDRESSING THE ISSUE OF COMPENSATION. • COMPENSATION MUST BE LINKED TO RESPONSIBILITY AND PERFORMANCE. • JOB DESCRIPTION/JOB CONTENT ANALYSIS. • JOB SPECIFICATIONS. • COMPENSATION/PAY PACKAGE ACCORDING TO JOB CONTENT.

46. COPENSATION ENDEAVOURS • PAY & PENSION COMMITTEE RECOMMENDATIONS • RATIONALIZATION OF THE PAY & PENSION KEEPING IN VIEW THE CONCEPTS OF “MARKET WAGE” AND “LIVING WAGE”. • MONETIZATION OF CERTAIN ALLOWANCE. • INTRODUCE THE CONCEPT OF “PAY FOR PERFORMANCE”. • PARAMETERIC REFORMS IN PENSIONS BY REDUCING THE PERCENTAGE OF COMMUTATION AND INCREASING TAKE- HOME PENSION.

47. National School of Public Policy • AIMS & OBJECTIVES • WILL PROVIDE AN UMBERLLA TO THE ENTIRE SPECTURM OF TRAINING FOR CIVIL SERVANTS i.e pre-service & In-service training. • Education in relevant areas of public policy like public finance, economic management, general management. (Eventually NSPP will become a degree awarding institution). • Research in areas of Public Administration i.e PUBLIC POLICY FORMULATION AND IMPLEMENTATION OVERSIGHT, DEVELOPMENT OF HRM CAPACITIES etc. • Research and consultancy of public policy options in critical areas. • International level of training/education with standard/quality to fill the critical gaps in civil servants training/education.

48. Human Resource Activities for Organizational Development Human Resources Merit based Recruitment & Selection Appropriate Training, Compensation, Job Security & Career Planning Job Performance; Evaluated by Objective Appraisals to be The benchmark For all compensations, Promotions etc. Organizational Input Transformation Organizational Inputs Processes Processes Outputs

49. THANK YOU