Exam #3 Flashcards
Alignment
Getting all employees pulling in the same direction; Aligned from top to bottom; Important to center in on goal; Company and individual goals being linked
Goals/Results Loop
Organization Goals –> Business Unit/Dept. Goals –> Individual Goals –> Individual Results –> Business Unit/Dept. Results –> Organization Results
Vision
Where we want to be in the future; The “dream”
Mission
The business we are in right now
Values
The qualities that define “how” we do business and that drive our culture
Strategy
How we will fulfill our vision– overarching approach
Plans
Step-by-step outline of ow we get from point A to point B
Goals
Steps and metrics within the plan
Mission Statement
Serves to unite organization; Articulates how we differ from our competition; Provides a rationale for decision-making and allocation of resources
Vision Statement
Our highest aspirations; Must be clear/compelling/inspiring; Paints picture of future state to which organization can aspire
Values Statement
Underpinning of culture; Should form basis of performance management system; Critical that it reflects actual business practice
Why is Planning Important?
People and organizations need plans to help attain dreams; If you don’t know where you are going, any path could get you there; Plans need to contain metrics so you’ll know where you are
What do Plans Contain?
Vision, Goals, Who is responsible for what, Deadlines, Everything needed to keep a project on track
Single-Use Plans
Developed to achieve a set of goals that are unlikely to be repeated in the future
Standing Plans
On-going plans that guide tasks that are performed repeatedly within an organization
Contingency Plans
Special plans to handle emergencies, setbacks, or other conditions outside of the norm
Long Term Plan v. Short Term Plan
Long (1-5 years); Short (1 year or less)
Plans Drive High Performance
Start with strong mission/vision; Set stretch goals for excellence; Create a culture that encourages learning; Understands that planning still begins and ends at the top of the organization
SMART goals
Specific, Measurable, Attainable, Relevant, Time Based
Ineffective v. SMART Personal Goal
SMART lays out the plan how you will get there; Most specific
Purposes of Goals and Plans
Legitimacy/Mission Statement; Source of Motivation and Commitment; Rationale for decisions; Guides to Action; Resources Allocation; Standards of Performance
What is Strategy?
“Big Picture” directional approach; Usually long-term; Helps org. achieve something major (new business, position, vision)
Elements of Strategy Link Everything
Mission –> Vision –> Long-term Strategic Goals –> Short-Term Goals –> Tactics and Actions
Corporate Strategy
Growth, Stability, Retrenchment, Diverstiture
Growth
Expansion into new markets; Increasing market share; Expanding business (merging or going ventures) Ex: Google, Ford
Stability
Maintaining current market position Ex: Coca-Cola
Retrenchment
Defensive posture to hold off threats while turning a company around Ex: Burger King
Divestiture
Selling off or folding a particular division Ex: Citigroup, AIG
Business Strategy
Differentiation, Cost Leadership, Niche, Vertical Intergration
Differentiation
Providing unique products, services, or features (Ex: Apple)
Cost Leadership
Being most competitive (lowest price) in terms of cost of product or service (Ex: Wal-Mart)
Niche
Catering to a particular segment of the market of a particular demand (Ex: IKEA)
Vertical Integration
Seeking cost savings and efficient through operating businesses along the supply chain
Strategic Planning
Process of defining strategy or direction and making decisions on the allocation of resources to pursue this strategy; Big picture view of org.; Providing honest assessment of where org is and how it is going to achieve vision
PESTLE Scan
Economic Environment, Sociocultural Environment, Legal/Regulatory Environment, Political Environment, Technological Environment, Natural Environment
Michael Porter’s Five Forces
Bargaining Power of Suppliers, Bargaining Power of Customers, Threat of New Entrants; Threat of Substitute Products; Competitive Rivalry within an industry
Scenario Planning
Often used by business and the military; Imagine the “what ifs” in future situations
SWOT Analysis
Strengths, Opportunities, Weaknesses, Threats
Stakeholder
Any person, group, or organization that could be impacted by an organization’s actions; Primary are directly affected; Secondary and indirectly affected
Stakeholder Analysis
Identify all stakeholders and analyze how each will be affected by an organization’s decisions and/or actions
Corporate Social Responsibility (CSR)
Self-regulation built into an organization’s business model whereby it monitors and ensures compliance with: spirit of law, ethical standards, International Norms
Some models of CSR go beyond compliance and engage in activities that are:
Beyond what is required by law; Beyond interests of the organization; Designed to further some societal good
CSR Benefits
Triple Bottom Line (people, profit, planet); helps recruit and retain talent; Helps limit risks; Differentiates Brand; Reduces scrutiny; Improves supplier relations
CSR Negatives
Distracts from cores missions to maximize profit for shareholders; Distracts from unethical business practices (Ex: Ronald McDonald); Can provide cover for controversial industries (tobacco, alcohol)
CSR Activities
Environmental, Philanthropic, Community Involvement; Ethics Training and Activities for Employees
CSR In Action
Reputation Institute conducted global research; Who you are matters more than what you do; Your corporate reputation means more to people than what you make
Corporate Reputation
Beliefs, Impressions, Opinions about an organization; Formed and communicated by multiple stakeholder groups (employees, customers, partners, media)
Benefits of Good Reputation
Customers willing to buy products for higher prices; Best talent employees; Investors want to buy stock; Other companies want to be partners; Regulators/Press give benefit of doubt; Communities like you
Negatives of Good Reputation
NONE; Takes time and attention to build one; Once built, can be damaged quickly
Business Ethics
Principles, Values, and Beliefs that define what is right and wrong behavior
Why should companies care about ethics?
Right thing to do; Expensive to ignore; Creates culture; Attracts good employees, better decisions/reputation, more engagement
Ethical Culture Overview
Leadership, Infrastructure, Communication, Training
Leadership
Role Models, Communicators, Discipline/Reward, Keepers of the Culture
Communication
Open culture, Manager training, Values everywhere, Robust communication up, down, and across
Infrastructure
Formal compliance systems, Background checks, Whistle-blowing systems, Policy, Performance management system
Training
Manager training, Identifying risk, Training around risks, Multiple venues
US Sentencing Commission Guidelines
Must self-report; Must have an effective ethics program (training, whistle-blowing, discipline, etc.)
US Sentencing Guidelines
Apply to all companies; Can be triggered by activities of one employee; Don’t apply to EEOC violations; Death Penalty also option (divest business and liquidate company)
Mitigating Factors
Having an effective program to prevent and detect violations of the law; Self-reporting, cooperating, accepting responsibility for criminal conduct
Aggravating Factors
Size of org. + degree of participation/tolerance/disregard for criminal conduct by “high-level personnel”; Prior civil and criminal history; Obstructing or impeding during the investigation or prosecution
J&J’s Credo
States responsibility to customers, employees, communities, and stockholders
Tylenol: October 1982
7 Chicago consumers died after ingesting Tylenol laced w/ cyanide; No one charged with the crime; FBI investigated several leads; J&J hopped on issue right away
How did J&J recover from the Tylenol issue?
Hotline, Coupons, Letters, Presentations; Videos, Tamper-resistant packaging, Media; Discounts, advertising, full refunds; Letters; Reports to stockholders
Analysis of J&J Success
Kept communication channels open; Took quick corrective action; Keep faith in the product; Protected the public image at all costs; Aggressively brought back the brand
Most Important Factors
Strong management; Sound strategy; Ethical Practices; Competitive edge; Shareholder orientation; Consistent profitability
What is trust?
Degree to which behavior/experience/reputation give us confidence in a person/institution/organization; Reputation + Trust go together
How does behavior positively affect trust? (J&J)
Showed how to do it right; Reintroduced products w/ new products; Press gave company benefit of the doubt
How does behavior negatively affect trust? (Exxon)
Mishandled problem from beginning; Leadership did not take responsibility; Still paying back; Limited trust because of past behavior
Trust Builds Ethical Culture
Trust in an ethical company leader to employee engagement
How did real estate in the 1990s crash the economy?
The bank that gave you the mortgage kept it until you paid it off; Substantial downpayment, steady job, 25% of income, excellent credit rating
How did real estate from 2000-2008 crash the economy?
The bank that gave you the mortgage, sold it to Wall Street investors; 100% financing w/ 0% down payment, no job needed, didn’t check if you had good credit score, job, or mortgage compared to salary
How else did real estate crash the economy?
Real estate values rose rapidly, home is appraised, you spend more money, real estate values plummet
Direct Causes of the Financial Causes
Regulatory Climate, Shadow Financial Market, Sub-Prime Mortgage, Incentives
Regulatory Climate
Glass-Steagall Act 1933 repealed in 1998 (separating commercial and investment banking); Debt regulations for banks eased; Markets self-regulating; revolving door between regulators and companies; Government is the problem
Shadow Financial Market
Credit Default Swaps; Securitized Mortgages (slice and dice); Derivatives; Hedge Funds
Sub-Prime Mortgages
Liar Loans; No $ down, no income verification; Consumers bought more than they could afford; Big hedge funds saw the problem w/ market and bet that these would fail
Incentives
Big rewards for short-term thinking among companies and individuals
Contributing Factors to Financial Crisis
Herd Mentality; Investment Banks; Rating Agencies; Lots of Cheap $; Innovation
Herd Mentality
Wall Street; Consumers; Real Estate is safe
Investment Banks
Go public; No skin in the game
Rating Agencies
Conflicts of interest; Rating financial products
Lots of Cheap $
Fed (low interest rates); Demand from China and Middle East
Innovation
Math whiz kids created complex products; No one really understood what these products were
Overview of how the Economy crashed
Rotten mortgages sold to investment banks –> Investment banks package them in securities –> Credit agencies say “they are AAA– perfectly safe” –> Banks sell rotten mortgage packages to investors –> AIG sells credit default swaps –> Hedge funds and bankers bet against what they have sold
Why is communication important to organizations and individuals
Share info; Influence others; Communicate our values; Inspire others and create a culture that promotes excellence; Create resonant workplaces and relationships
Characteristics of Resonance
Respect; Inclusion; Open and honest dialogue; Ability to effectively deal with conflict`
What do leaders use to shape emotional intelligence?
What they communicate; How they share information and build relationships
How is human communication complex?
Words (spoken and written); Nonverbal (facial expressions, posture, gestures); Content (our thoughts and emotions)
How does communication work?
Sender encodes message and decides how to send it –> Channel (face to face, email, letter, phone) –> Receiver gets message, decodes/decides how to interpret
Feedback
Receiver lets sender know that the message has been received, or that more communication is desired
Feedback Loop
Sender and receiver share information back and forth until both feel that the message has been fully and accurately conveyed and interpreted
Identify Your Stories
Most important skill for a job; Think about your background and what the culture/job description is
STAR Method
Situation, Task, Action, Results
Why does communication matter to organizations?
Establishes culture, values, goals, strategic direction
Identifying Audience
Critical to communicate to stakeholders, employees, shareholders, customers, public, government
Downwards Communication
Flows down from the top of the organization
Upward Communication
Flows up from the bottom of the organization
Horizontal Communication
Flows between individuals at the same or similar levels in the organization
Formal v. Informal v. Filtering
Formal– planned communication such as newsletters, town-hall meetings; Informal– spontaneous communications in the hallways, offices, cafeterias; Filtering– deliberate miscommunication
Typical Communication Tools
Face-to-Face (individual, groups, town-halls, cascades); Technology (email, Skype, linked, etc.); Print Communication (articles, posters, letters, printed flyers); Videos or loops on TVs
Channel Richness Order (Most to Least)
Face to Face, Phone, Email, Letter, Bulletin Board
Most Rich
Most clues (body language, tone); Two way (feedback); Personal (one on one); Highly effective
Least Rich
Least personal; Few clues; Little or no feedback; Highly efficient
Effective v. Efficient Communication
Effective– receiver understands the message and knows what to do; Efficient– communicating using the fewest resources (time, money, space)
How Important is Communication?
Survey conducted of CEOs by Mercer HR Consulting in 2000; Said changes worked best when people communicated well
9/11
Rick Rescorla (head of security at Morgan Stanley); Planned for disaster, specifically an attack by plane on WTC; He was the only Morgan Stanley employee to die in attacks
Crisis Management
Crises are common (scandals, natural disasters, 9/11, downsizings)
Management Competencies
Stay calm, Be visible, Put people before business, Tell the truth, Know when to get back to business
Crisis Planning
Prevention (build relationships, detect signals from environment); Preparation (crisis management team, spokesperson, plan, communication system); Containment (rapid response, get truth out, meet safety/emotional needs, return to business)
Three Categories of Crisis
Customer Service Issues; Failures of Competence; Events that are not connected to core competence
Customer Service Issues
Dell’s inability to fulfill some orders; Apple’s insult to new iPhone customers
Failure of Competence
Mattel and lead paint; Jet Blue and the delayed/cancelled flights
Events that are not connected to core competence
Martha Stewart and the stock trading scandal; McDonal’d losing two CEOs in less than 6 months (death)
Elements of a Response
Believable Apology (truth and admit mistakes); Must be delivered by CEO; Solution outlines; Remuneration should be in place; Consider how it will play globally
What will happen if the company has a good reputation?
Given benefit of doubt; Ex: General Re (Berkshire Hathaway/Warren Buffet CEO) survived reinsurance crisis; J&J survived Tylenol; Toyota survived sudden acceleration problem
What will happen if the company has repetitional issues?
Serves as a reminder that something is wrong with the company (BP)
