مقاله Strategy Management

“Article”

Wide Approach to Performance Appraisal of Strategy Management

Professor: Dr. Gerasim Davtian

Author: Amin Golestani

Ph.D. Student of Strategy Management

Topic of Thesis: Research on Basic Factors of Strategy Management in Commercial Enterprise

Email Address: dr.golestani@yahoo.com

December, 2009

Wide Approach to Performance Appraisal of Strategy Management

Key Words:

Strategy: Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder[1]
Policy: According to a dictionary definition, policy is “any course of action followed primarily because it is expedient or advantages in a material sense”. When put into a political theme, this definition would read: ‘Public Policy is a concept (usually in a written document), whereby the government or a political party will determine decisions, actions and other matters that will prove advantages to society in general’.
Infrastructure: Infrastructure is the basic physical and organizational structures needed for the operation of a society, enterprise, the services and facilities necessary for an economy to function.
Enterprise: an organization created for business ventures.
Critical Thinking: Critical thinking is the ability to think clearly and rationally. It includes the ability to engage in reflective and independent thinking.

Abstract

Today, most business enterprises engage in strategic planning, although the degree of sophistication and formality varies considerably. Conceptually, strategic planning is deceptively simple: analysis the current and expected future situation, determine the direction of enterprise and develop means for achieving the mission. In this article, writer try to start for introduction of relation shipment between strategy and policy, explain the performance appraisal of strategy management.

For finding the exact meaning of the strategy, it is required to professional research about its: concepts, Approach, planning, developing, Implementation, evaluation, Improvement (promotion), and management which make all aspects of one strategy. As you are well aware arrangements of all these aspects in a paper is impossible but for finding to more information you can to follow the PhD Thesis of this author anyway, but in this paper you can reach to the chain viewing of aspects of strategic issue.

Appraisal is an integral part of a system of managing, knowing how well a manager plans, organize, staffs, lead and controls area actually managing effectively and practically, any activity could not be succeed without measure and appraisal, Effective performance appraisal should also recognize the legitimate desire of employees for progress in their professions, in this paper author try to explain wide approach of concept.

Wide Approach of Strategy Management

The exact meaning of wide approach is related to global attitude of most managers in whole of the word and there are many different between this concept and holistic approach, just in an organization.

Enterprise adopting of strategy concentrates on groups specially customers, a particular product line, a specific geographic region, or other aspects that become the focal point of the firm’s efforts. Rather than serving to entire market with its products or services, an enterprise may emphasize a specific segment of the market. There are many different definition of strategy, but a comprehensive one refers to determine the firm’s mission, purpose or its basic long-term objectives, followed by adoption of action courses and allocation of necessary resources to achieve these aims.

A strategic planning process is not something that can occur in an ad hoc way, at a regular planning meeting or during a staff meeting. It requires careful planning to set it up so that the process is thorough and comprehensive. When you develop or revise a strategic plan, you are setting the parameters for the work of your organization, usually for two, three years or longer. So, it does make sense to spend some time and energy planning for your strategic planning process.

A Planning Improvement Program is the part of the asset strategic plan where the performance measures and targets required to assess and evaluate the performance of the planning processes are recorded. Review of performance targets follow of the monitoring, evaluation and improvement of planning performance.

Plans can be classified as (1) Missions of purposes, (2) Objectives or Goals, (3) Strategies, (4) Policies, (5) Procedures, (6) Rules, (7) Programs, (8) Budgets, so, each of the above eight items can be core of various planning in the enterprises.

Although goal-oriented management is now one of the most widely practiced managerial approaches, its effectiveness is sometimes questioned. Faulty implementation is often blamed, but another reason is that MBO (Management by Objective) may be applied as a mechanistic technique focusing on selected aspects of the managerial process without integrating them into a system.

Designing an effective plan depends on an exact forecasting; it can be classified into four basic types, which we introduce them with the brief explanation as following [1]:

Qualitative: these techniques are subjective or judgment and are based on estimates and opinions.
Time series analysis: the primary focus of this concept is based on the idea that data relating to past demand can be used to predict future demand.
Causal Forecasting: assumes that demand is related to some underlying factor (or factors) in the environment.
Simulation: simulation models allow the forecaster to run through range of assumptions about the condition of the forecast.

The internal perspective defines the business processes and the specific activities the organization must master to support the customer value proposition. It is important that strategy not only specify the desired outcomes but also describe how these outcomes will be achieved, hence, reaching to success, an enterprise has to forecast and also, monitoring internal happening, this is exactly meaning to wide perspective. [2]

Strategic Thinking and Strategic Leadership

Leadership is a complex process, we have serious reservations over the extent to which set of standards, qualities or competencies can ever fully capture the nature of what makes some leaders/organizations successful and others unsuccessful.

Strategic management is according to Hendry, Johnson & Newton (1993) [3], not about establishing right or optimal solutions, but about understanding complex relationships and the uncertain environment. Hence it is linked with strategic thinking which is defined by Mintzberg [4] “as the way in which people in the organization use intuition and creativity to formulate an idea of where the organization should be heading” ([۵] cited in Heracleous, 2003 p. 47).

A critical aspect of strategic thinking is strategic leadership which according to Freedman & Tregoe (2003) includes scanning the environment and being skilled at making common sense of it for the organization and its employees. A successful strategic leader also emphasizes the internal view of leadership components such as visioning, involving, motivating and communication. Many managers make the mistake of not understanding the importance of the human or “soft” side of management. An organization’s vision and mission will not be useful if it is not supported by all employees in their day-to-day decision making, behaviors, performance and the chance of being successful decreases (Freedman & Tregoe 2003) [6].

Communication has four major functions within an organization, namely control, motivation, emotional expression and information. For an organization to enhance performance the managers need to maintain some form of control over their employees,

Stimulate employees to perform, provide means for emotional expression and make the information flow effective. The vertically flow of communication can be divided into downward and upward. Downward communication flows from one level to lower level of an organization opposed to upward communication which flows to a higher level in the organization. Barriers that hinder effective communication is for example, information overload which is the condition where individuals have more information than the individuals can sort out and use. They tend to select out, ignore or forget information. Language could also be a barrier of effective communication, since words mean different things to different people. Frequently used terms and words used by top managers might not be understandable by lower level employees.

One of the major reasons for doing qualitative research is to become more experienced with the phenomenon you are interested in. Many qualitative researchers believe that the best way to understand any phenomenon is to view it in its context (Trochim, 2006) [7].

Strategic management approaches seek a causal relationship that links the final results of the organization to the processes and resources it manages. Even though, in relative terms, performance

Management in the public sector is still in its infancy (Wisniewski and Stewart, 2001) [8] in most countries, pioneer initiatives have gradually been developing a global approach that seeks to combine all the managerial aspects that contribute to organizational performance. In this regard, all aspects of the external environment can be influenced on performance of strategies.

In order to get an understanding of the chosen company’s external environment and it’s affecting factors please attention as following factors:

Political Factors, Economical Factors, Social- Demographic Factors, Technological Factors

Strategic Alliance:

In above mentioned concepts about the implementation of strategy there is a key namely strategic alliance. In valuation of the strategy alliance we meet to various key points which some of them are very profitable and the others can make very difficulties.

Advantages of a Strategic Alliance

Four key benefits can be expected from a strategic alliance:

Increased leverage: Strategic alliances allow the companies to gain greater results from their companies’ core strengths
Risk sharing: A strategic alliance with an international company will help to offset the company’s market exposure and allow to jointly exploiting new opportunities.
Opportunities for growth: Strategic alliances can create the means by which small companies can grow.
Greater responsiveness: By allowing the companies to focus on developing its core strengths, strategic alliances provide the ability respond more quickly to change and opportunity. [9]

Disadvantages of a Strategic Alliance

High commitment, specially time, money, people
Difficulty of identifying a compatible partner
Potential for conflict
A small company risks being subsumed by a larger partner
Strategic priorities change over time
Payment difficulties
Political risk in the country where the strategic alliance is based
If the relationship breaks down, the cost/ownership of market information, market intelligence and jointly developed products can be an issue.
Entering into a strategic alliance requires commitment above all else, including time and economical resources. [9]

There is a model in Caroline [10] paper as Combination of the Internal & External Perspective strategy management as following which can to show a holistic diagram in meeting to understanding concept of alliance:

Figure 1 Strategic Management Combined Model (Own Illustration, 2008) [10].(find this figure in original source)

The model aims at combining the external and internal perspective of strategic management; the goal is reached by analyzing the environment and the organization separately and proceeding afterwards with a conjoint strategic analysis containing both internal & external analysis tools. This is done in order to address the importance of combining the two perspectives and not to exclude one or the other. The strategic analysis seeks to find relations and connections between the both perspectives through the identification of internal & external key factors. The final outcome of the strategic analysis is to result in a plan which becomes strategic by covering all aspects of an organization and its environment in a uniformed sense.

With all above arguments we can to adopt everything in following model:

Figure 2 Strategic Management with alliance approach. (find this figure in original source)

Above model presents this meaning why for valuation of an organization we have to consider all aspects of its environment and when we are evaluating environment also, we have to limited total aspects to relative aspects of organization. In this way outcome model will be a new concept as appraisal strategic analysis, which can to use for measurement of performance.

So, for reaching to the main goal of strategy, it is required that knowing about the stage of strategy, for example, we can say, there are two version of a given strategy a) strategy as intended, b) strategy as realized, thus it is that, whether on the battlefield or in business, the realized strategy is always one part intended, the plan as conceived beforehand and one part emergent adaptation to the condition encountered, needless to say, there are different levels for true planning of a strategy, I) enterprise level, II) business unit level, III) Functional level, or the trend of planning for an effective strategy shall be considered at all three level, on the other hand, strategy can fail and, when it does, tactics dominate, the action indeed, execution becomes strategy and in this category there are many various items as above mentioned, which for developing a strategy must be considered.

The strategy word has very complex concept as you can find it in this paper but for exit from this mish mash, finally, the strategist has seen future, current and previous trend’s of an organization and he/she shall to plan a wide map with consideration all procedures for various level of core business.

For achieving the objective of this paper, it is necessary to introduce performance of management why it is mentioned in topic of this article.

Performance Management in strategic view:

To some people, performance management means collecting performance information. To others it implies a personal appraisal. The PMMI definition incorporates range of different tools and activities used to drive improvement. We define performance management as: “Taking action in response to actual performances to make outcomes for users and the public better than they would otherwise be”. Performance management matters to everyone who wants to see local communities better served by councils and their partners. Managers can use it to ensure that services are improving and are more efficient.

Action may be individual, team, service, corporate or community level. Improvement to outcomes should benefit service users but does not always mean increased service levels – sometimes better outcomes can mean delivering better value for money. Reducing levels of service in one area may free up resources to be used more effectively elsewhere. Performance management is ‘taking action in response to actual performance to make outcomes for users and the public better than they would otherwise be’ (IDeA, 2004).

Action may be individual, team, service, corporate or community level. Performance management is one element of the Council’s overall arrangements that help us to plan, monitor and manage the delivery of our services [11].

The field of performance management can comprise two separate types of management. In one aspect of performance management, an analyst may view the performance of a company as a whole, and also evaluate the effectiveness of the managers and heads of companies in reaching goals. In another sense, performance management may be a system of evaluating employees to help them reach reasonable goals and thus ensure that the company performs better.

Performance management of individual employees differs. It generally includes the following: planning work, setting goals, offering feedback and reviews, offering opportunities to learn more in one’s field, and rewarding employees who perform well.

Employee performance management works the best state when work is planned and goals are consistent. This may mean having a clear way to communicate regarding work expected at the moment and upcoming work. Planning also includes defining expectations of the employee so that he/she is not broadsided by evaluation criteria not included in planning. Planning and setting goals in performance management also creates a system of predictable rewards for good performance, and consequences for poor performance. This way the employee can reasonably assume the consequences of work performance, whether good or bad [12].

Conclusion:

A strategy is an organizational plan, which involves putting specific plan into action. In other words a strategy shows how a business will achieve its goals, thus enabling an organization to turn its values into action. These values are of course what a company stands for. Today the most popular approach is called the Strategic Management Approach, as the approach to strategy has changed since 1995.

The Strategic Management Approach refers to the overall design of the organization, which can be determined only when equal importance is given to the attainment of goals and to policy/ strategy.

Strategic Management Approach has different levels, which includes Corporate Level Strategy, Business Unit Strategy and Functional Level Strategy.

Strategic management is the art and science of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its objectives. It is the process of specifying the organization’s objectives, developing policies and plans to achieve these objectives, and allocating resources to implement the policies and plans to achieve the organization’s objectives. Strategic management, therefore, combines the activities of the various functional areas of a business to achieve organizational objectives. It is the highest level of managerial activity, usually formulated by the Board of directors and performed by the organization’s CEO and executive team. Strategic management provides overall direction to the enterprise and is closely related to the field of Organization Studies. In the field of business administration it is possible mention to the “strategic consistency.”

An Organization is combination of various talented people in different areas of work, who are joined together for attaining some common objectives. It demands the co-operation and the co-ordination from the part of its employees. Once the employee has been selected, trained and motivated, he is then appraised for his performance. Performance appraisal is the step where the management finds out how effective it has been at hiring and placing employees. The strength of any organization is its people. If people are attended to work properly they can recognize their talents by developing their capability and utilizing them appropriately, organizations are likely to be dynamic and grow fast. Ultimately the varieties of tasks in any organizations have to accomplish by the people. Some of them may have capabilities to do certain tasks better than other tasks. And some of them may not have capabilities to do the task assigned to them. In this situation one of the important activities we conduct by any organization is the Performance Appraisal management and all mentioned methods are related to achieving the competitive advantages in markets, Competitive advantage can be defined as anything a firm does better compared to rival firms or do or own something that other firms doesn’t.

Glossary:

IDeA: Improvement and Development Agency for local government.

PMMI: Performance Management, Measurement and Information project.

CEO: Chief Executive Officer.

References:

[۱] Richard B Chase, F Robert Jacobs, Opertions Management (11^th Edition) 2007

[۲] Carolinr Axen Wrigfors, Karin Ellasson, Master Thesis in Business Administration “Strategy Management” June, 2008.

[۳] Hendry, J., Johnson, G. & Newton, J. (1993). Strategic Thinking: Leadership and management of change. Chichester: John Wiley & Sons.

[۴] Mintzberg, H., Ahlstrand, B. & Lampel, J. (1998). Strategy Safari. Hemel Hemstead: Prentice-Hall.

[۵] Heracleous, L. (2003). Strategy and Organization. Cambridge: Cambridge University Press.

[۶] Freedman, M. & Tregoe, B.B. (2003). The Art and Discipline of Strategic Leadership.McGraw-Hill

[۷] Trochim, M. K. W. (2006). Qualitative Measures, Retrieved May 15, 2008, from

http://www.socialresearchmethods.net/kb/qual.php

[۸] Wisniewski, M. and Stewart, D., (2001), “Using the statutory audit to support continuous improvement in Scottish local authorities”, ,QWHUQDWLRQDO_-RXUQDO_RI_3XEOLF_6HFWRU_0DQDJHPHQW, Vol. 14, No. 7, pp. 540-555.

[۹] Diana J. Mosquera : ““Strategic factors influencing the transition of businesses

[۱۰] Caroline Axén Wrigfors & Karin Eliasson, Strategic Management Combined Model (Own Illustration, 2008).

[۱۱] Bournemouth Borough Council Performance Management Strategy March 2009.

[۱] A person, group, organization who affects or can be affected by an enterprise’s actions