Chapter 2

Strategic Training
McGraw-Hill/Irwin Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.
Introduction

 Business strategy – a plan that

integrates the company's goals, policies,
and actions.
 The strategy influences how the company
uses:
physical capital, financial capital, and human
capital.
 Goals – what the company hopes to
achieve in the medium- and long-term
future.
2-2
 Impact of Strategy on the amount &
type of training

 Strategy has a particularly strong

influence on determining:
The amount of training devoted to current or
future job skills.
The extent to which training is customized
for the particular needs of an employee or is
developed based on the needs of a team,
unit, or division.
Whether training is restricted to specific
groups of employees or open to all
employees. 2-3
Introduction (cont.)

 Strategy has a particularly strong

influence on determining:
Whether training is planned and
systematically administered, provided only
when problems occur, or developed
spontaneously as a reaction to what
competitors are doing.
The importance placed on training
compared to other human resource
management practices such as selection and
compensation. 2-4
Figure 2.1 - Evolution of
Training's Role

2-5
The Evolution of Training’s Role
 Learning – the acquisition of knowledge by
individual employees or groups of employees
who are willing to apply that knowledge in
their jobs in making decisions and accomplishing
tasks for the company.
 Knowledge – what individuals or teams of
employees know or know how to do(human&
social knowledge) as well as company rules,
processes, tools, and routines (structured
knowledge).
 It is either tacit knowledge or explicit knowledge.

2-6
The Evolution of Training’s Role
(cont.)

 Explicit knowledge – knowledge that

can be formalized, codified, and
communicated.
 Tacit knowledge – personal knowledge
based on individual experience that is
difficult to explain to others. Passed along
to others through direct experience
(interacting with or watching other
employees)
2-7
Training Events

 No Information about the relationship between

the training content and performance result or
business need.
 This approach assumes that business
conditions are predictable and can be
controlled by the company.
 Not likely to give a company a competitive
advantage because explicit knowledge is well
known and can be imitated.

2-8
Learning emphasis implications

 Learning has to be related to performance

improvement and business goals.
 Due to the unpredictability in the business
environment, learning needs to occur on
as-needed basis.
 Because tacit knowledge is difficult to acquire in
training programs, so learning should occur
through mentoring, chat rooms, and on the job.
 Learning should be supported psychologically as
well as physically and technically. (learning
environment – managers and peers support) 2-9
Creating and Sharing Knowledge

 Development of human capital:

Cognitive knowledge – know what
Advanced Skills – know how
System understanding& creativity – know why
Self-motivated creativity – care why

2-10
The Evolution of Training’s Role
(cont.)

 Key capabilities needed to implement

learning strategies:
1. Alignment of learning goals to the business
goals.
2. Measurement of the overall business impact
of the learning function.
3. Movement of learning outside the company
to include customers, vendors, and suppliers.
4. A focus on developing competencies for the
most critical jobs.
2-11
The Evolution of Training’s Role
(cont.)

 Key capabilities needed to implement

learning strategies:
5. Integration of learning with other human
resource functions such as knowledge
management, performance support, and
talent management.
6. Training delivery approaches that include
classroom as well as e-learning.
7. Design and delivery of leadership
development courses.
2-12
 Strategic Management

 Set of decisions and actions used to

implement strategies that will provide a
competitively superior fit between the
organization and its environment so as to
achieve organizational goals

 Responsibility = top managers &

chief executive

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2-13
14
2-14
 Strategic Management Model

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2-15
 Environmental Scanning

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 Variables in Societal Environment

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 Checklist for Analyzing
Organizational Strengths and Weaknesses
Management and Organization Marketing Human Resources
Management quality Distribution channels Employee experience,
Staff quality Market share education
Degree of centralization Advertising efficiency Union status
Organization charts Customer satisfaction Turnover, absenteeism
Planning, information, Product quality
Work satisfaction
control systems Service reputation
Grievances
Sales force turnover
Finance Production Research and Development
Profit margin Plant location Basic applied research
Debt-equity ratio Machinery obsolescence Laboratory capabilities
Inventory ratio Purchasing system Research programs
Return on investment Quality control New-product innovations
Credit rating Productivity/efficiency Technology innovations

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2-18
 Issues Priority Matrix

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 EFAS

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 IFAS

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 SFAS

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 TOWS MATRIX

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 Strategy Formulation

Strategy formulation is the development of long-range

plans for the effective management of environmental
opportunities and threats, in light of corporate strength and
weaknesses. It includes defining the corporate mission,
specifying achievable objectives, developing strategies, and
setting policy guidelines.
 Strategy Formulation

 Mission

An organization’s mission is the purpose or reason for the

organization’s existence. It tells what the company is providing
to society – either a service like housecleaning or a product like
automobiles. A well-conceived mission statement defines the
fundamental, unique purpose that sets a company apart from
other firms of its type and identifies the scope of the company’s
operations in terms of products (including services) offered and
markets served. It may also include the firm’s philosophy about
how it does business and treats its employees.
 Mission

It puts into words not only what the company is now, but what it
wants to become – management’s strategic vision of the firm’s
future. (some people like to consider vision and mission as two
different concepts: a mission statement describes what the
organization is now; a vision statement describes what the
organization would like to become. We prefer to combine these
ideas into a single mission statement.) the mission statement
promotes a sense of shared expectations in employees and
communicates a public image to important stakeholder groups in
the company’s task environment. It tells who we are and what
we do as well as what we’d like to become.
.
 Bristol-Myers Squibb
Mission Statement

Our company’s mission is to

extend and enhance human life
by providing the highest-quality
pharmaceutical and related
health care products.

27
2-27
 Strategy Formulation

 Objectives

Objectives are the end results of planned activity. They state

what is to be accomplished by when and should be quantified if
possible. The achievement of corporate objectives should result
in the fulfillment of a corporation’s mission.
 Strategy Formulation

 Strategies

A strategy of a corporation forms a comprehensive master plan

stating how the corporation will achieve its mission and
objectives. It maximizes competitive advantage and minimizes
competitive disadvantage.

The typical business firm usually considers three types of

strategy: corporate, business, and functional.
 Strategy Formulation

1. Corporate strategy describes a company’s overall direction

in terms of its general attitude toward growth and the
management of its various businesses and product lines.
Corporate strategies typically fit within the three main
categories of stability, growth, and retrenchment.
 Strategy Formulation

2. Business strategy usually occurs at the business unit or

product level, and it emphasizes improvement of the
competitive position of a corporation’s products or services
in the specific industry or market segment served by that
business unit.

Business strategies may fit within the two overall categories

of competitive or cooperative strategies.
 Strategy Formulation

3. Functional strategy is the approach taken by a functional

area to achieve corporate and business unit objectives and
strategies by maximizing resources productivity. It is
concerned with developing and nurturing a distinctive
competence to provide a company or business unit with a
competitive advantage..
 Strategy Formulation

 Policies

A policy is a broad guidelines for decision making that links the

formulation of strategy with its implementation. Companies use
polices to make sure that employees throughout the firm make
decisions and take actions that support the corporation's mission,
objectives, and strategies.
 Strategy Implementation

Strategy implementation is the process by which strategies

and polices are put into action through the development of
programs, budgets, and procedures. This process might
involve changes within the overall culture, structure, and/or
management system of the entire organization. Except when
such drastic corporate wide changes are needed, however,
the implementation of strategy is typically conducted by
middle and lower level managers with review by top
management. Sometimes referred to as operational planning,
strategy implementation often involves day-to-day decisions
in resource allocation. .
 Strategy Implementation

A program is a statement of the activities or steps needed to

accomplish a single-use plan. It makes the strategy action-
oriented. It may involve restructuring the corporation,
changing the company’s internal culture, or beginning a new
research effort.
 Strategy Implementation

A budget is a statement of a corporation’s programs in terms

of dollars. Used in planning and control, a budget lists the
detailed cost of each program. Many corporations demand a
certain percentage return on investment, often called a
“hurdle rate,” before management will approve a new
program. This ensures that the new program will
significantly add to the corporation’s profit performance and
thus build shareholder value. The budget thus not only serves
as a detailed plan of the new strategy in action, it also
specifies through pro forma financial statements the
expected impact on the firm’s financial future.
 Strategy Implementation

Procedures, sometimes termed Standard Operating

Procedures (SOP), are a system of sequential steps or
techniques that describe in detail how a particular task or job
is to be done. They typically detail the various activities that
must be carried out in order to complete the corporation’s
program.
 Strategy Implementation

Evaluation and control is the process in which corporate

activities and performance results are monitored so that
actual performance an be compared with desired
performance. Managers at all levels use the resulting
information to take corrective action and resolve problems.
Although evaluation and control is the final major element of
strategic management, it also can pinpoint weaknesses in
previously implemented strategic plans and thus stimulate
the entire process to begin again.
Corporate Strategy

The level of strategy concerned with the question

“What business are we in?”
Dealing with three key issues facing the corporation as a
whole:
 Directional strategy: overall orientation toward growth,
stability or retrenchment
 Portfolio strategy: the industries or markets in which
the organization competes through its products and
business units
 Parenting strategy: the manner in which the
organization coordinates activities, transfers resources
and cultivates capabilities among product lines and
business units.
2-39
Directional Strategies

2-40
Directional Strategy: Growth

 Growth can be promoted internally by

investing in expansion or externally by
acquiring additional business divisions
- Internal growth = can include development of
new or changed products
- External growth = typically involves
diversification – businesses related to current
product lines or into new areas

2-41
Directional Strategy: Stability

 Stability, sometimes called a pause

strategy, means that the organization
wants
to remain the same size or
to grow slowly and in a controlled fashion

2-42
Directional Strategy:
Retrenchment

 Retrenchment = the organization goes through a

period of forced decline by either shrinking
current business units or selling off or liquidating
entire businesses

 Liquidation = selling off a business unit for the

cash value of the assets, thus terminating its
existence

 Divestiture = involves selling off of businesses

that no longer seem central to the corporation
2-43
Table 2.7 - Implications of
Business Strategy for Training

2-44
Table 2.7 - Implications of
Business Strategy for Training

2-45
Table 2.7 - Implications of
Business Strategy for Training

2-46
Figure 2.2 - The Strategic Training
and Development Process

2-47
Table 2.2 - Strategic Training and
Development Initiatives and Their Implications

2-48
Table 2.3 - Questions to Ask to Develop
Strategic Training and Development Initiatives

2-49
Organizational Characteristics
That Influence Training (cont.)

 Human resource management (HRM)

practices – the management activities
related to investments, staffing
performance management, training, and
compensation and benefits.

2-50
Organizational Characteristics
That Influence Training (cont.)

 Staffing strategy – the company's

decisions regarding where to find
employees, how to select them, and the
desired mix of employee skills and
statuses.
 Human resource planning –
identification, analysis, forecasting, and
planning of changes needed in the human
resource area to help the company meet
changing business conditions.
2-51