Area 1: Leadership and Strategy Flashcards
Vision Statement
An inspiring, concise statement of what a company is, who it serves, and where it is going. For all stakeholders.
Mission Statement
A statement that elaborates on a vision statement by providing additional details about how the organization plans to achieve its vision of the future. For employees, generally.
Core Competency
A specific function that a firm regards as central to its success and is something difficult for competitors to imitate.
Middle-out Approach
Each business unit has its own goals/practices that contribute to organizational goals. (Specifically in terms of CSR this is effective)
Personnel Department
The dreaded forerunner of the HR department. Hiring, firing, payroll, training.
Corporate Values Statement
A statement issued by executives at a company to employees that indicates how business should be conducted within that organization.
Code of Ethics
A formal set of principles designed to guide an organization’s decision-making in an ethical manner.
Code of Conduct
A set of rules and regulations that define what is and is not acceptable behavior for employees of a company.
Corporate Citizenship
Actions taken by a company that demonstrate its commitment to issues that affect the surrounding local and global communities.
Corporate Social Responsibility
A company’s commitment to protecting the physical environment and the people who live in the communities where it operates. Sustainability and Social.
Line Manager
An individual with responsibility for directly managing individual employees or teams.
Stakeholders
All the groups affected by the actions of an organization, including stockholders, management, employees, and members of the surrounding community.
Advisory Role
The most recognizable responsibilities of an HR manager is to gather information about issues, diagnose any problems, and offer advice on how best to resolve disputes, such as which course of action to take when confronted with a disciplinary matter, performance problem, or grievance.
Service Role
HR managers also perform activities that serve an organization’s staff departments. These activities include recruiting, training, record keeping, and reporting, all of which can be provided more effectively when handled through a centralized human resource department.
Control Role
HR managers are in charge of establishing important policies and procedures that affect several aspects of employment. These policies and procedures affect compensation, safety, equal employment opportunity, and labor relations. HR staff serve as representatives for senior management by monitoring compliance with these policies.
HRM
Human Resources Management
CSR
Corporate Social Responsibility
LEED
Leadership in Energy and Environmental Design
Strategic Planning
The outlining of the purpose, strategic goals, and performance expectations for an organization.
Strategic Alignment
The process of making sure that all the operating functions of a business are working in support of the business’s overall strategy.
Organizational Audit
(David Ulrich) A comprehensive review of the company’s assets, policies, and practices that focuses on six areas: company mindset, competence, performance or consequence, governance, capacity for change, and leadership.
SWOT
A strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats facing an organization.
PEST
An analysis that is often performed as part of a SWOT analysis. The acronym stands for political, economic, social, and technological, which describe all factors that will determine what threats and opportunities an organization faces.
Five Forces
(Michael Porter) Theory that five basic forces determine the competitive dynamics in an industry: the threat of new entrants; the threat of substitutes; the bargaining power of customers; the bargaining power of suppliers; and industry rivalry.
Imperfect Competition
Having the fewest competitors possible Barriers to entering and exiting the market Numerous suppliers and buyers Asymmetric information Heterogeneous products
Perfect Competition
Many competitors Few barriers to entry Limited suppliers/buyers Homogeneous information Homogeneous products
Three Grand Strategies
Cost Leadership
Differentiation
Focus/Niche Strategy
Cost Leadership
Successful execution of cost leadership occurs when an organization is able to sell its product or service at a lower cost. Not only must buyers perceive the product or service to be comparable or better than rival products, but it must also be sold at a significantly lower price. Cost leadership is often achieved through technological innovations and low-cost labor.
Differentiation
High-quality products, extraordinary customer service, innovative designs, technological capability, and positive brand image are a few ways for an organization to achieve differentiation. Instead of providing a product at the lowest possible price, an organization will use its product’s uniqueness to justify a higher price. An automaker, for instance, may differentiate itself by emphasizing the features and technological innovations that make its cars safer than others. Buyers value unique products and services, and the attribute(s) with which a business chooses to differentiate itself must be significant to justify its price premium.
Focus/Niche Strategy
Businesses that utilize this strategy aim for either a cost advantage or differentiation advantage within a narrow, clearly defined segment of a particular industry. This strategy is also known as a niche strategy since the focus can be on a specific product or buyer, a defined distribution channel, or a particular location. Success will depend on how well the organization appeals to specific consumers and how narrow the market segment is. An unnecessarily small segment will limit the number of potential buyers and reduce the opportunity for a differentiation advantage.
Four Strategic Types
(Miles & Snow) Prospector Defender Analyzer Reactor
Prospector
Four Strategies - This strategy is suited for managers who prioritize innovation, risk-taking, and growth. The prospector does well in environments where creativity is more important than efficiency. Researchers argue that it tends to produce the greatest revenue growth.
Defender
Four Strategies - Managers who utilize the defender strategy are more concerned with stability, control, and internal efficiency. Rather than focus on innovating and growing the company’s customer base, this strategy prioritizes retaining a steady number of customers with high-quality products. While not suitable for every environment, managers should consider this strategy in times of uncertainty or decline.
Analyzer
A compromise between the prospector and defender strategies, the analyzer strategy focuses on stability but still devotes a small number of resources to innovation. While some products will be efficiently targeted towards stable environments, other products will focus on dynamic environments with opportunities for growth. Researchers argue that this strategy is the most profitable and viable, as it most often produces a sustained competitive advantage. Generally large companies
Reactor
Although it is actually less of a strategy than a description of how an organization responds to its environment, the reactor strategy is best when specific goals haven’t been stated, and top management fails to provide a long-term plan. The organization makes decisions based on the immediate needs at the time to produce the fastest results. For these reasons, the reactor strategy is often unsuccessful and should be avoided.
Organizational Chart
Shows who reports to whom
Hiring Schedule
Shows when and what employees will be needed, especially as organizations navigate change and diversification.
HRIS
Human Resource Information System
Human Resource Information System
Software that allows a company to manage a wide range of functions, including human resources management, payroll, and accounting.
Productivity
The relationship between output and inputs; i.e., the effectiveness of using particular inputs (e.g., labor) to produce an output.
Quality
The degree to which a set of inherent characteristics fulfills requirements.
Training
The education of employees and instruction about job skills for immediate use.
Development
The education of employees, including instructing them in the skills needed for both present and future jobs.
Learning Transfer
Learning transfer occurs when the learner is able to successfully transfer behavior, knowledge, and skills to the job. This transfer can result in improvements in job performance.
SMART
Ensures that goals are useful to an organization's long term success: Specific Measurable Attainable Relevant Time-Bound
Value Chain
Nine interrelated activities that a business performs to create a product or service. 5 Primary Activities (production), 4 Secondary Activities (support)
Value Chain (parts)
Inbound Logistics Operations Outbound Logistics Marketing/Sales Service
Firm Infrastructure
Human Resources Management
Technology Development
Procurement
Diversification
A diversification strategy involves offering new products or services and entering into new markets. This strategy aims to take advantage of momentum in new markets, minimize the risk of a shrinking core market, and expose the organization to new customer groups.
AKA Growth Strategy
Horizontal Diversification
Horizontal diversification involves acquiring or developing new products that complement existing products and appeal to current customers.
Concentric Diversification
Concentric diversification involves adding new products with technological or marketing similarities with existing products but appealing to new customers. An organization can leverage its current technologies, equipment, and marketing to create and sell these products in some cases.
Conglomerate Diversification
Conglomerate diversification involves offering to a new customer base new products that are entirely different from and unrelated to the organization’s existing products and markets.
Vertical Diversification
Vertical diversification (also known as vertical integration) involves expanding control over multiple or all stages of an organization’s product supply chain.
Administration
Are things permitted? Evaluate and decide what is/isn’t allowed (think of approving a timecard).
Management
How do you get the work done? Schedules, plans, etc.
Leadership
Where are we going? Vision, energize others, impact others.
Functions of Management
per Henri Fayol in 1916... Planning Organizing Directing Controlling Staffing (not always included)
Planning Function
Planning is the most pervasive and basic function of management. Planning means deciding in advance which actions should be taken to make the most of human and nonhuman resources, solve problems, and complete short- and long-term objectives. Most difficult, requires full organizational alignment.
Organizing Function
All organizations possess human, physical, and financial resources. Organizing these resources requires the development of productive relationships among them to achieve the business’s purpose and goals. Departments and their respective hierarchies should be clearly defined, arranged, and coordinated so that the chain of authority is structured in a coherent manner.
Directing Function
Employees work best and achieve objectives efficiently when their leaders display strong communication, motivation, and supervision. Direction involves utilizing these tools to influence and guide employees to produce desired results and meet organizational goals.
Controlling Function
Controlling involves comparing and measuring planned standards for work performance against the actual work performance. Standards should be realistic and easily measurable so that managers can track performance and notice any deviations as they occur. Truly effective controlling allows managers to predict these deviations before they occur and, once determined, take corrective action when necessary.
Staffing Function
This function concerns recruiting, training, developing, and retaining competent managers and employees.
Not all models include this one, some just have the other four.
Participative Management
Participative management encourages employees at all levels of the organization to involve themselves in decision-making processes and contribute to workplace policies that achieve organizational goals. The objectives of participative management are fostering collaboration and strengthening employees’ commitments to their teams and the organization.
4 Ways to encourage Participative Management
Information Sharing
Training and Development
Employee Contribution (visible integration)
Rewards and Motivation
Theories of Leadership
Great Man - born, not made (outdated)
Trait-Based - set of traits leaders have, who they are (outdated)
Behavior-Based - behaviors that leaders do
Situational (Contingency) - leaders adapt to situations to make path forward.
Great Man Theory
Great leaders are born, not made. Some historical figures are the height of great leaders: Caeser, Napolean, Lenin, Lincoln
Obviously not true, there are many other leaders (not men), and you can become a leader
Trait-Based Leadership
Leaders have a specific set of traits, they fundamentally are a leader. Intelligence, strength, optimism, confidence.
Outdated, as there is no single formula for what makes a good leader.
Behavior-Based Leadership
Leaders do a specific set of actions. If you adopt the right behaviors you can be a leader. Less wrong than trait-based, but still not great.
Situational Leadership
Leaders adjust their behavior to a situation to be effective. No single traits or behaviors (or birth) determine leadership.
Contingency Theory of Leadership
(Fred Fielder)
Per situational leadership, but depends on how well a leader’s style matches to a situation (rather than conforms).
1. Good or bad subordinate relationships?
2. Structured or unstructured tasks?
3. Weak or strong position of power?
Very weak or very strong situations require task-based leadership. Middling situations require strengthening your relationships.
Path-Goal Leadership
(Martin Evans)
Leaders should:
Clarify the path to reaching a goal.
Make that goal attractive to subordinates.
Types of Leadership (via Path-Goal) Directive Supportive Acheivement-Oreiented Participative
Directive - set tasks and how to perform (best with ambiguous but intrinsically satisfying work)
Supporting - concern for well-being and subordinate needs and preferences
Acheivement - High bar for goals and performance, high confidence in the team
Participative - consult with subs to make decisions, good when all are personally involved in work
Normative Model of Decision-Making
(Vroom and Yetton)
3 Types of Decision-Making
Autocratic - Leaders makes decision, maybe solicit for info if needed (group only inputs info)
Consultative - Group shares all info and input, then leader makes decision
Group - Group shares all info and input, then group makes decision regardless of leader
This depends on 3 things:
How much info the leader has/needs.
How much group supports org goals.
How much group will accept leader’s decision.
Herzberg’s Two-Factor Theory
Motivation/Hygiene Theory
Motivation concerns intrinsic satisfaction and engagement. Presence is positive and leads to fulfillment. (engagement, passion, challenge)
Hygiene concerns dissatisfaction and extrinsic needs. Absence is negative and leads to complaints. (salary, conditions, discipline)
Motivation Factor
Motivation concerns intrinsic satisfaction and engagement. Presence is positive and leads to fulfillment. (engagement, passion, challenge)
Hygiene Factor
Hygiene concerns dissatisfaction and extrinsic needs. Absence is negative and leads to complaints. (salary, conditions, discipline)
The Hierarchy of Needs
(Abraham Maslow) Triangle bottom to top, starting with base physiological needs and working up to self-actualization. Self Actualization - Deep morality Esteem - Respect of others Love/Belonging - Family Safety - Security of Food Physiological - Food
Classical Conditioning
Pavlov’s Dog
We can condition a neutral stimulus to elicit a response by pairing with an impactful stimulus
Operant Conditioning / Behavior Reinforcement
(BF Skinner)
Can encourage good behavior with reward, discourage bad behavior with punishment.
Shaping is like training a dog (aprroximate closer and closer to the right behavior)
Chaining is like learning how to build a birdhouse (each task leads to another in the sequence)
Shaping
Skinner’s Operant Conditioning
Training a dog. Slowly rewarding behavior that is narrower toward the goal behavior.
Chaining
Skinner Operant Conditioning
Training each piece in order so that each step begets the next to teach a complex task.
Theory of Acquired Needs
(David McClelland)
3 Types of Needs to Satisfy
Affiliation - acceptance and interaction (group and social work)
Acheivement - accomplishment, feedback (moderate challenges)
Power - personal and institutional authority (managerial authority)
Expectancy Theory
(Victor Vroom)
Assess a situation to see if they can achieve it, and if the rewards are worth achieving it.
Expectancy - Does effort = performance?
Instrumentality - Does performance = outcome?
Valence - Is effort worth the outcome?
Transactional Leadership
A leadership style that accomplishes objectives by relying on contingent rewards.
Goals, workflows.
Find deviations and correct them.
Transformational Leadership
A leadership style that focuses on changing the attitudes and assumptions of employees so that they commit to the organization’s mission, goals, and strategies.
Provide vision, establish trust, empower the team.
Corporate Governance
The process by which businesses are directed and controlled, typically by a board of directors.
Fiduciary Duty
An obligation to act in the best interest of another party; for example, corporate board members have a fiduciary duty to the shareholders.
Audit
The systematic examination of accounting records to make sure that they adequately reflect the operational and financial status of a company.
CAE
Chief Audit Officer
Clayton Antitrust Act
(1914)
Extend and strengthen Sherman Anti-Trust (avoid stifled competition)
FTC & Justice Department regulate all corporate mergers.
Thus, the fed approves corporate mergers.
Securities Exchange Act
(1934)
Enforce Corporate behavior and governance with the SEC.
Foreign Corrupt Practices Act
(1977 - FCPA)
US nationals and corporations can’t pay foreign officials (even if it’s normal there) - no bribes
Any company with US securities must accurately record financial transactions
FCPA
Foreign Corrupt Practices Act (1977)
Sarbanes-Oxley Act
(2002 - SOX)
Requires all publicly traded companies to:
Have corporate complaint and anti-retaliation policies.
No insider training and 30 day notice for blackouts.
No personal loans to board and executives.
Accurate financial statements and control reports.
Must have code of ethics.
Whistleblower protections in place - OSHA may not allow you to fire them or even keep them fired during process.
Preliminary Reinstatement
(2015, per SOX)
When a whistleblower case is a security risk and you refuse to reinstate them, OSHA will now consider reinstating them on case-by-case basis if prima facie.
Economic Reinstatement
When governement forces you to reinstate only the pay and benefits of employee (but doesn’t force you to bring them physically back to work).
Prima Facie
Employee engaged in a protected activity (whistleblowing).
Employer was aware of this (actually or constructively).
Employer took adverse action.
A reasonable person would think that adverse action was a result of protected activity.
3 Fiduciary Duties
Duty of Care - give a reasonable amount of effort toward management (stay informed, attend meetings, make good decisions)
Duty of Loyalty - Act in best interests of organization (no conflicts of interest/personal gain)
Duty of Disclosure - disclose all relevant info on issues.
