Questions – Strategic emphasis – Old State University 1. What organizational strategy (defender, prospector, analyzer, reactor) was Dean Barnes pursing? Discuss the strategy Dean Blake is pursuing. What do you perceive to be his objectives? Does this strategy make sense in terms of the internal and external environment of the school? 2. Identify the key problems and the key opportunities in this case. 3. Formulate an HR strategic plan that will support Dean Blake’s new organizational strategy. Your plan will make recommendations for HR activities in the areas of staffing, performance management, compensation, and employee relations (the ER section should address issues of communication and employee participation and provide recommendations on how Blake’s changes should have been introduced to the faculty). Support your recommendations with appropriate HR theories, concepts, models and processes (utilizing your textbook as a reference). Strategic Human Resource Management – Old State University The School of Business Administration at Old State University is one of 12 statesupported collegiate business schools in a Midwestern state. It is located in a city with a population of 400,000 and a diversified industrial base. Old State is the only statesupported institution in town. One small private college provides competition to the University Business School. Recently, the University has experienced leadership transition. Dr. George Barnes, Dean of the Business School since 1998, retired. During his administration, the enrollment had increased from 1,202 undergraduates and 76 M.B.A. student in the 199899 academic year to 2, 089 undergraduates and 218 M.B.A. students in the most recent academic year. Dean Barnes was well liked by students, faculty, and the central administration of Old State. However, he had not led the School of Business in any new directions and had basically concentrated on “doing the same things better.” The “same things” meant an emphasis on traditional programs (accounting, marketing, finance, etc.) teaching undergraduate students in the age range of 18-22 in daytime programs, and teaching a small number of full-time M.B.A. students. The latter have been mostly graduates of the school’s undergraduate program who decided they were willing to spend two more years on campus to obtain the second degree. Dean Barnes had also been successful in upgrading the proportion of faculty with terminal degrees from 56 percent in 1998 to 85 percent in the most recent year. Exhibit 1.1 provides faculty and student enrollment data for the University for selected years during Barnes’s tenure. During the most recent academic year, the Dean’s Search Committee (consisting of faculty, students, alumni, central administration, and local business representatives) met frequently, screened over 100 applicants, and personally interviewed six. While the committee arrived at no consensus, the majority supported Mr. Jack Blake for the Deanship. An offer was made and, after several weeks of negotiation, Blake accepted the Deanship. His background was an M.B.A. from a prestigious Ivy League business school, and executive leadership positions in a variety of U.S. corporations in marketing. He left the position of Vice President of Marketing at one of the “Fortune 500” companies to accept the Deanship. During the screening interviews with the Search Committee, Blake had made it clear that, if he were selected, the school of business would be “moving in new directions and exploring new markets.” It was very clear Blake did not want to be a “paper pusher,” but did want to be an innovator and an entrepreneur. When pressed for specifics, he had indicated he “would have to study the situation in more detail.” When the new Dean arrived on campus in the fall, he immediately convened a Strategic Planning Committee to (1) evaluate the University’s external environment, opportunities, constraints, competitive advantages, and internal environment, and (2) recommend a new set of long-term missions, goals, objectives, and programs. The committee consisted of two senior professors, the University’s Vice President for Academic Affairs, one graduate student, one undergraduate student, two prominent alumni, and two local business leaders. The committee recommended that the school focus on the adult learner since demographic analysis suggested the age group 18-22 was shrinking and would be a declining market over the next decade. Specific recommendations included (1) more evening courses for both undergraduate and graduate students; (2) structuring the schedule so that both degrees could be earned entirely in the evening; (3) offering credit courses in some suburban locations; (4) offering requested noncredit practitioner courses at the school, at the employer’s work site , and in various underserved small cities around the state; (5) exploring the possibility of offering degree programs at these locations; (6) offering new M.B.A. degree concentrations in such areas as management of the arts, health care management, and public sector management, and (7) offering a new “executive” M.B.A. The new Dean enthusiastically endorsed the report and distributed copies at the last faculty meeting of the fall semester. Several questions were raised, but it didn’t appear serious opposition existed. However, at a following meeting of department Chairs, the Dean indicated that his top priority of the next academic year was to fill the five vacant positions with new faculty who would be supportive of the new directions in which the school was moving. Specifically, he asked them to keep several criteria in mind while recruiting and selecting new faculty. These included previous managerial work experience, a willingness to teach night courses, a willingness to travel to other cities to offer coursework, an ability to work with management practitioner s on special projects, and previous experience in teaching executives. In addition, he suggested that the Chairs consider those criteria when evaluating the performance of existing faculty and recommending salary increases. Finally, he indicated that one of the faculty positions would be used to recruit a new Assistant Dean for External Affairs who would become his link to the practitioner community. The latter would be involved with helping practicing managers identify their needs, working with faculty to meet these needs, and negotiating contracts for these services. When word of the Dean’s faculty recommendations spread through the “rumor mill” the reaction was swift and negative. Many of the “old guard” faculty felt they were hired primarily to teach full-time students on campus during the day. Consequently, they were threatened by the new evaluation criteria. They were also concerned that the Dean was interjecting nonacademic criteria into their departmental faculty recruitment processes and diverting resources to nonacademic activities. These faculty members felt the inevitable result would be a declining quality of education in the school. A group of these faculty members have asked to meet with the Dean to discuss his proposals. The Dean is preparing a justification for both his strategy and his human resource management (faculty) recommendations. Exhibit 1.1 – Faculty and Student Enrollment Date for the College of Business Administration in Selected Years, 1998-2016. Academic Year Faculty 1998-99 2000-01 2005-06 2010-11 2012-14 2015-16 54 58 66 74 78 80 Faculty with Ph.D.s 30 36 46 57 66 68 Student Enrollment B.S 1,202 1,289 1,654 1,913 2,065 2,089 Student Enrollment M.B.A. 76 98 134 154 221 218 Total Student Enrollment 1,278 1,387 1,788 2,067 2,286 2,307 From: Nkomo, S., Fottler, M., & McAfee, R. B. (2005). Applications in Human Resource Management (5 th edition). Mason, Ohio: T homson Southwestern, p. 96–98. The Miles and Snow Typology Adapted from Barney, J.B. & Griffin, R.G. “The management of organizations: Strategy, structure, behavior.” Houghton Mifflin, 1992. Prospector Raymond Miles and Charles Snow suggest that business level strategies generally fall into one of four categories: prospector, defender, analyzer, and reactor. An organization that follows a prospector strategy is a highly innovative firm that is constantly seeking out new markets and new opportunities and is oriented toward growth and risk taking. 3M is an excellent example of a firm that uses prospector strategies. Over the years, it has prided itself on being one of the most innovative major corporations in the world. Employees at 3M are constantly encouraged to develop new products and ideas in a creative and entrepreneurial way. This focus on innovation has led 3M to develop a wide range of products and markets, including invisible tape and antistain fabric treatments. Another example: Johnson & Johnson links decentralization with a prospector strategy. Each of the firm’s different businesses is organized into a separate unit, and the managers of these units hold full decision-making responsibility and authority. Often, these businesses develop new products for new markets. As the new products develop and sales grow, Johnson & Johnson reorganizes so that each new product is managed in a separate unit. Defender Rather than seeking new growth opportunities and innovation, an organization that follows a defender strategy concentrates on protecting its current markets, maintaining stable growth, and serving its current customers. BIC Corporation used defender strategies, despite its history as an innovative firm (the original BIC “crystal” and the BIC “biro” pen were significant innovations in the writing instruments industry). Since the late 1970s, with the maturity of the market for writing instruments, BIC has adopted a less aggressive, less entrepreneurial style of management and has chosen to defend its substantial market share in the industry. It has done this by emphasizing efficient manufacturing and customer satisfaction. Another example: Often a firm implementing a prospector strategy will switch to a defender strategy. This happens when the firm successfully creates a new market or business and then attempts to protect its market from competition. Mrs. Fields Inc. was one of the first firms to introduce high quality, high-priced cookies. Mrs. Fields sold its product in special cookie stores and grew very rapidly. This success, however, encouraged numerous other companies to enter the market. Increased competition, plus reduced demand for high-priced cookies, has threatened Mrs. Fields’s market position. To maintain its profitability, the firm has slowed its growth and is now focusing on making its current cookie operation more profitable. Analyzer An organization that follows an analyzer strategy both maintains market share and seeks to be innovative, although usually not as innovative as an organization that uses a prospector strategy. Most large companies fall into the third category, because they want both to protect their base of operations and to create new market opportunities. Proctor & Gamble (P&G) uses analyzer strategies. As a major consumer goods company, P&G has established numerous name brand products, such as Crest toothpaste, Tide laundry detergent, and Swiffer cleaning products. It is important for P&G to continue to invest in its successful products, in order to maintain financial performance. But P&G also needs to encourage the development of new products and brand names. In this way, it can continue to expand its market presence and have new products to replace those whose market falls off. Through these efforts P&G can continue to grow. Analyzers often pursue a “second-in” strategy and improve upon the product/service offerings of their competitors. Reactor According to Miles and Snow, an organization that follows a reactor strategy has no consistent strategic approach; it drifts with environmental events, reacting to but failing to anticipate or influence those events. Not surprisingly, these organizations usually do not perform as well as organizations that implement prospector, defender, or analyzer strategies. Most organizations would probably deny using reactor strategies. However, International Harvester (IH) during the 1960s and 1970s followed this approach. At a time when IH’s market for trucks, construction equipment, and agricultural equipment was booming, IH failed to invest in research and development, in improvements in manufacturing, or in improvements in distribution. By the time a recession cut demand for its products, it was too late for IH to respond, and the company lost millions of dollars. Indeed, at one time IH had the largest annual loss of any company in the history of the world. In the last ten years, IH has had to sell off virtually all of its businesses, except its truck manufacturing business. IH has moved from being a dominant firm in trucking, agriculture, and construction to a medium-sized truck manufacturer because it failed to anticipate changes in its environment. In 1985, International Harvester sold off most of its agricultural division to Tenneco, Inc which merged it into its subsidiary J.I. Case under the Case IH brand. Following the terms of IH’s agreement with Tenneco, International Harvester became Navistar International Corporation in 1986. Another example: During the 1970s and 1980s the Large Information Systems division of Honeywell seemed to follow a reactor strategy. As a relatively small manufacturer of mainframe computers, Honeywell sometimes tried to be very innovative in its research and development efforts and sometimes tried to reduce its costs as much as possible. Sometimes it focused on very innovative software, and sometimes it laid off hundreds of skilled workers. Not until Honeywell entered into joint ventures with some Japanese and European firms did it begin to focus its strategic efforts. Strategy Type Definition Examples Prospector Is innovative and growth oriented, searches for new markets and new growth opportunities, encourages risk taking 3M Defender Protects current markets, maintains stable growth, serves current customers BIC Analyzer Maintains current markets and current customer satisfaction with moderate emphasis on innovation P&G Reactor No clear strategy, reacts to changes in the environment, drifts with events International Harvester in the 1960s and 1970s, Honeywell in the 1970s and 1980s Alignments of Strategy, Structure, and Technology Excerpted from Miles, R.E. et al., “Organizational strategy, structure, and process,” Academy of Management Review, 1978, July, 546-562. Miles Strategic Types “Prospector” First to market Strategy Strategic problem: How to locate and exploit new product and market opportunities. Solutions: Creating change in the industry, growth through product and market development, monitors wide range of environmental conditions and events. Organic Structure Structural problem: How to facilitate and coordinate numerous and diverse operations. Solutions: Tendency toward product structure with low division of labor and a low degree of formalization; decentralized control and short-looped horizontal information systems; complex coordination mechanisms and conflict resolved through integrators. Flexible, prototypical technologies Technological problem: How to avoid long-term commitments to a single technological process. Solutions: low degree of routinization and mechanization; technology embedded in people. “Analyzer” Second-in strategy Strategic problem: How to locate and exploit new product and market opportunities while simultaneously maintaining a firm base of traditional products and customers. Solutions: Low investment in research and development, combined with imitation of demonstrably successful products; surveillance mechanisms mostly limited to marketing, some research and development Matrix structure Structural problem: How to differentiate the organization’s structure and processes to accommodate both stable and dynamic areas of operation. Solutions: Loose matrix structure combining both functions and product groups; moderately centralized control system with vertical and horizontal feedback loops; some conflict resolution through product managers, some through normal hierarchical channels. Dual technological core Technological problem: How to be efficient in stable portions of the domain and flexible in changing portions. Solutions: Stable and flexible technological components; influential applied engineering group; moderate degree of technical rationality (technology can never be completely effective or efficient) “Defender” Seal off stable set of products & customers Strategic problem: How to “seal off” a portion of the total market to create a stable set of products and customers. Solutions: Focus on narrow and stable domain, aggressive maintenance of domain (e.g., competitive pricing and excellent customer service); cautious and incremental growth primarily through market penetration; some product development but closely related to current goods and services. Mechanistic Structure Structural problem: How to maintain strict control of the organization in order to ensure efficiency. Solutions: Tendency toward functional structure with extensive division of labor and high degree of formalization; centralized control and long-looped vertical information systems; simple coordination mechanisms and conflict resolved through hierarchical channels. Single core cost-efficient technology Technological problem: How to produce and distribute goods or services as efficiently as possible. Solutions: Cost-efficient technology; single core technology; continuous improvements in technology to maintain efficiency.


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