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Chapter 5Chapter 5
Leadership andStrategic Planning
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Leadership
• The ability to positively influence people and systems under one’s authority to have a meaningful impact and achieve important results
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Strategic Planning
• The process of envisioning an organization’s future and developing the necessary goals, objectives, and action plans to achieve that future.
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The Baldrige “Leadership Triad”
Leadership
Strategic Planning
Customer andMarket Focus
Operations
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Executive Leadership
• Defining and communicating business directions• Ensuring that goals and expectations are met• Reviewing business performance and taking
appropriate action• Creating an enjoyable work environment• Soliciting input and feedback from customers• Ensuring that employees are effective contributors• Motivating, inspiring, and energizing employees• Recognizing employee contributions• Providing honest feedback
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Key Idea
Six key leadership competencies can be described as navigator, communicator, mentor, learner, builder, and motivator.
Dale Crownover, President, Texas Nameplate Co. (a 2-time Baldrige Award recipient)
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Leadership Competencies
• Navigator—creates shared meaning and provides direction toward a vision,mission, goal, or end-result.
• Communicator—effectively listens and articulates messages to provide shared meaning.
• Mentor—provides others with a role to guide their actions. • Learner—continuously develops personal knowledge,
skills, and abilities through formal study, experience, reflection, and recreation.
• Builder—shapes processes and structures to allow for the achievement of goals and outcomes.
• Motivator—influences others to take action in a desirable manner.
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Leading Practices – Leadership (1 of 2)
Leading Practices – Leadership (1 of 2)
• Create and deploy a customer-focused strategic vision and clear quality values
• Create a sustainable organization and environment for performance improvement, accomplishment of the mission, innovation, agility, and learning
• Demonstrate personal commitment to organizational values, develop future leaders, and reinforce high performance
• Create a focus on action and communicate with, empower, and motivate all employees
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Leading Practices – Leadership (2 of 2)
• Address organizational governance to include management and fiscal accountability, protection of stakeholder interests, and conduct evaluations to improve the leadership system
• Create an environment that fosters legal and ethical behavior
• Integrate public responsibilities, resource-sustaining processes, and community support into business practices
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Key Idea
The purpose of leadership theories is to explain differences in leadership styles and contexts.
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Leadership Theories
• Classic theories:– Trait approach– Behavioral approach– Role approach
• Contemporary and emerging theories: – Situational leadership– Transactional leadership theory – Transformational leadership theory– Substitutes for leadership theory– Emotional intelligence theory
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Key Idea
Emerging leadership theories build on or enlarge traditional theory by attempting to answer questions raised, but not answered, by earlier approaches.
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Leadership SystemLeadership System
• Leadership system – how decisions are made, communicated, and carried out at all levels; mechanisms for leadership development, self-examination, and improvement
• Effectiveness of the leadership system depends in part on its organizational structure
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Key Idea
An effective leadership system respects the capabilities and requirements of employees and other stakeholders, and sets high expectations for performance and performance improvements.
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Example: Solar Turbines, Inc.
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Governance
• Governance – the system of management and controls exercised in the stewardship of an organization.– Approving strategic direction– Monitoring and evaluating CEO performance– Succession planning– Financial auditing– Executive compensation– Disclosure– Shareholder reporting
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Leadership and Social Responsibilities
• Ethics
• Health, safety, and environment
• Community support
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Key Idea
Practicing good citizenship refers to leadership and support — within the limits of an organization’s resources — of publicly important purposes, including improving education, community health, environmental excellence, resource conservation, community service, and professional practices.
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Strategic PlanningStrategic Planning
• Goals to be achieved• Policies to guide or limit action• Action sequences, or programs, that
accomplish the goals
““A strategy is a pattern or plan that integrates A strategy is a pattern or plan that integrates an organization’s major goals, policies, and an organization’s major goals, policies, and action sequences into a cohesive whole.”action sequences into a cohesive whole.”
FormalFormal strategy strategy includesincludes::
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Leading Practices - Strategic Planning
Leading Practices - Strategic Planning
• Systematic planning systems for strategy development and deployment
• Understand the competitive environment and the factors and strategic challenges that determine success, and gather and analyze a variety of external and internal data
• Align short-term action plans with long-term strategic objectives, communicate them, and track progress
• Derive human resource plans from strategic objectives and action plans
• Identify key measures and indicators for tracking progress, reinforce organizational alignment, and compare performance with competitors
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Strategic Planning ProcessStrategic Planning Process
Mission Vision Guiding Principles
Environmental assessment
Strategies
Strategic Objectives
Action Plans
Broad statements of direction
Capabilities and risks
Things to change or improve
Implementation
Reason for existence Future intent Attitudes and policies
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Mission
• Definition of products and services, markets, customer needs, and distinctive competencies
• Solectron: “…to provide worldwide responsiveness to our customers by offering the highest quality, lowest total cost, customized, integrated, design, supply chain, and manufacturing solutions through long-term partnerships based on integrity and ethical business practices.”
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Vision
• Where the organization is headed and what it intends to be– Brief and memorable - grab attention– Inspiring and challenging - creates excitement– Descriptive of an ideal state - provides guidance– Appealing to all stakeholders - employees can
identify with
• Solectron: “Be the best and continuously improve”
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Values (Guiding Principles)
• Define attitudes and policies for all employees, which are reinforced through conscious and subconscious behavior at all levels of the organization.
• Alcoa: integrity, environmental health and safety, customer, excellence, people, profitability, accountability
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Environmental Assessment
• Customer and market requirements, expectations, and opportunities
• Technological and other innovations• Organizational strengths and
weaknesses• Financial, societal, ethical, regulatory
and other potential risks• Changes in global or national economy• Factors unique to the organization, such
as partner and supply chain needs
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Key Idea
Strategies are broad statements that set the direction for the organization to take in realizing its mission and vision.
Strategic objectives are what an organization must change or improve to remain or become competitive.
Action plans are things that an organization must do to achieve its strategic objectives.
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Strategy Deployment
• Developing detailed action plans, defining resource requirements and performance measures, and aligning work unit, supplier, or partner plans with overall strategic objectives.
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Policy Deployment (Hoshin Kanri)
Policy Deployment (Hoshin Kanri)
• Top management vision leading to long-term objectives
• Deployment through annual objectives and action plans
• Negotiation for short-term objectives and resources (catchball)
• Periodic reviews
See Figure 5.5!See Figure 5.5!
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Key Idea
Strategic objectives and action plans often require significant changes in human resource requirements, such as redesigning the work organization or jobs to increase employee empowerment and decision making, promoting greater labor/management cooperation, modifying compensation and recognition systems, or developing new education and training initiatives.
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Link Human Resource Plans and Business Strategy
• Examples– Redesign work organization to increase
empowerment– Promote greater labor/management
cooperation– Foster knowledge sharing and
organizational learning– Establish partnerships with education to
better prepare future employees
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The Seven Management and Planning Tools
The Seven Management and Planning Tools
• Affinity diagrams
• Interrelationship digraphs
• Tree diagrams
• Matrix diagrams
• Matrix data analysis
• Process decision program charts
• Arrow diagrams
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Leadership and Organizational Structure
• Basic types of organizational structures
– Line organization
– Line and staff organization
– Matrix organization
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Key Idea
As more and more companies accept the process view of organizations, they are structuring the quality organization around functional or cross-functional teams.
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Team-Based Organization Chart
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Leadership in the Baldrige Criteria
The Leadership Category examines how an organization’s senior leaders address values, directions, and performance expectations, as well as a focus on customers and other stakeholders, empowerment, innovation, and learning. Also examined is the organization’s governance and how the organization addresses its public and community responsibilities.
1.1 Senior Leadershipa. Vision and Valuesb. Communication and Organizational Performance
1.2 Governance and Social Responsibilitiesa. Organizational Governanceb. Legal and Ethical Behaviorc. Support of Key Communities
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Strategic Planning in the Baldrige Criteria
The Strategic Planning Category examines how an organization develops strategic objectives and action plans. Also examined are how chosen strategic objectives and action plans are deployed and how progress is measured.
2.1 Strategy Developmenta. Strategy Development Processb. Strategic Objectives
2.2 Strategy Deploymenta. Action Plan Development and Deploymentb. Performance Projection