PERFORMANCE MANAGEMENT

AND STRATEGIC PLANNING

 Strategic Planning
• Strategic planning: 
Process that involves describing the
organization’s destination, assessing barriers
that stand in the way of that destination and
selecting approaches for moving forward. 
o Main goal of strategic planning is to allocate
resources in a way that provides organizations
with a competitive advantage.
 Strategic planning: purposes:

1. Helps define the organization’s identity

2. Helps organizations prepare for the future
3. Enhances ability to adopt to environment changes
4. Provides focus and allows for better allocations of
resources
5. Produce an organizational culture of cooperation
6. Allows for the consideration of new options and
opportunities
7. Provide employees with information to direct daily
activities
Process of linking performance management to the strategic
plan:
Organizational strategic plans
 
Mission
Vision Link among
Goals organization & unit
Strategies
strategic plans, job
descriptions, and
Units strategic plans
Mission
individual and team
Vision performance
Goals
Strategies

Job description
Tasks
Knowledge
Skills
Abilities

Individual & team

performance
Results
Behaviors
Developmental plans
Process of linking performance management to
the strategic plan:

1. Strategic planning
2. Developing strategic plan at the unit level
3. Job description
4. Individual and team performance
 
 Strategic Planning
• Strategic planning:
 There are several steps that must be considered
in the creation of a successful strategic plan. 
o The conduct of an environmental analysis.
o The creation of an organizational mission.
o The creation of an organizational vision.
o Setting goal.
o Creation of strategies.
 Environmental analysis
o External environment:
  The non exhaustive list of external factors that should
be considered in environmental analysis:
• Economic
• Political / legal
• Social
• Technological
• Competitors
• Customers
• Suppliers
 Environmental analysis
o Internal environment:
  The non exhaustive list of internal issues that
should be considered in environmental
analysis: 
• Organizational structure
• Organizational culture
• Politics
• Process
• Size
 Environmental analysis
The information collected through internal and
external environment is used to conduct a gap
analysis. 
• The pairing of external opportunities and threats
with internal strengths and weakness lead to
following situations:
• Opportunity + strength
• Opportunity + weakness
• Threat +strength
• Threat + weakness
 Strategic Planning
• Mission:  
• Good mission statements provide answers to
the following questions:
• Why does the organization exist?
• What is the scope of organizations activities?
• Who are the customers served?
• What are the products and services offered?
 Strategic Planning
• Components of Mission: 
Mission statement includes the following
components: 
• Basic product or service to be offered
• Primary market or customer groups to be served
• Unique benefits and advantages of product or
services
• Technology to be used in production or delivery
• Fundamental concerns for survival through
growth and profitability
 Strategic Planning
Mission statements also typically include information on the
organization values and beliefs:
• Managerial philosophy of the organization
• Public image sought by the organization
• Self concept of business adopted by the employees and stakeholders
• Vision:
Vision statement includes a description of future aspiration. It provides
direction and focus.
• First it focuses attention on what is most important and eliminates
unproductive activities.
• Second, it provides a context from which to evaluate new external
opportunities and threats.
 
 
 Strategic Planning
Characteristics of good vision statement:
• Brief: A vision statement should be brief so that
employees can remember it. 
• Verifiable: A good vision statement should be able to
stand the reality test.
• Bound by a time line: A good vision statement specifies
a timeline for the fulfillment of various aspirations.
•  Current: Outdated vision statements are not useful.
Vision statements should be updated on an ongoing
basis, ideally as soon as the old vision is fulfilled.
 Strategic Planning
• Focused: A good vision statement is not a laundry
list of aspiration, but rather focuses on just a few
aspects of an organization’s performance that are
important to future success.
• Understandable: vision statements need to be
written in a clear and straightforward manner so
that they are understood by all employees.
• Inspiring: Good vision statements make
employees feel good about their organization’s
direction and motivate them to help achieve the
vision.
 Strategic Planning
• Goals
• The purpose of setting goals is to formalize statements about what
the organization hope to achieve in the medium to long range
period.
• Goals provide more specific information regarding how the
mission will be implemented.
• Strategies: 
• Strategies are descriptions of gain plans or how to procedures to
reach the stated objectives.
• Strategies could address issues of growth, survival, turnaround,
stability, innovation, and leadership among others.

 
 Contribution of HR functions in
implementing the strategies
1. Communicate knowledge of strategic plan
2. Outline knowledge, skills, and abilities
needed for strategy implementation
3. Propose reward system
• Developing strategic plans at unit level:
  Realization of full potential plays a central role
to develop a strategic plan at a unit level.
 
 Contribution of HR functions in
implementing the strategies
• Job description: 
Job description provides information on the various
tasks performed together with a description of the
KSAs (knowledge/skills/abilities) required for the
position.
This description includes only cursory and indirect
information regarding job issues.
• Individual and team performance:
Performance management system need to motivate
employees to display the behavior and produce the
results required to support the organization.
 Choices in PM system design
• Criteria (Behavioral vs results criteria)
• Participation (Low vs high employee participation)
• Temporal dimension (Short-term vs long-term
criteria)
• Level of criteria (Individual vs team criteria)
• System orientation (Developmental vs
administrative orientation)
• Rewards (Pay for performance vs tenure/position)