CHAPTER NINE

STRATEGY IMPLEMENTATION: STAFFING AND DIRECTING

This is the second of two chapters dealing with the implementation of strategy. It deals specifically with
staffing the corporation with people having the appropriate mix of abilities and skills and directing
people to use their abilities and skills most effectively and efficiently to achieve organizational
objectives. The chapter explains how a change in strategy is most likely to have a significant impact on
staffing needs. Research is presented on matching the manager to the strategy. Executive succession
issues are dealt with. Downsizing is discussed as a commonly misused way to implement a turnaround
strategy. The chapter also explains how a corporation's culture can be evaluated and managed to better
suit the new strategy. Action planning, Management By Objectives, and Total Quality Management are
presented as useful techniques to coordinate implementation activities.

TOPICS COVERED

• Staffing requirements are likely to follow a change in strategy.

• Matching managers to the corporate or business unit strategy.

• Downsizing as a way to implement a retrenchment strategy.

• Assessing the compatibility of a new strategy with the existing corporate culture.

• Assessing cultural compatibility in mergers and acquisitions.

• Action planning, management by objectives, and total quality management.

• Hofstede's five dimensions of a nation's culture.

SUGGESTED ANSWERS TO DISCUSSION QUESTIONS

1. What skills should a person have for managing a business unit using a differentiation
strategy? Why? What should a company do if no one having these skills is available
internally and the company has a policy of promotion only from within?

Research does appear to support the proposition that the manager of a corporation or business unit should
be matched to the strategy for successful implementation. Those executives who successfully implement
a differentiation business strategy tend to have a high internal locus of control and have more experience
in R&D. Because of the likely growth orientation of the strategy, managers should probably have a
greater willingness to take risks, a higher tolerance for ambiguity, and sales/marketing experience. These
characteristics make sense because of the product/market orientation needed of any unit interested in
setting its products or services apart in the competitive marketplace. If this type of person is not
available internally, then the company must recruit an appropriate outsider. Under the condition of a
promotion from within policy, the policy should be reconsidered and an exception made. Otherwise, the
company must take a chance on promoting one of its own - a good reason for proceeding cautiously.

2. When should someone from outside the company be hired to manage the company or one of
its business units?

Research on successful firms provides no clear answer to this question. Results are mixed. Research
does suggest, however, that firms in difficulty can improve their chances for success if they bring in an
outsider who does not have the same devotion to past management practices as do most internal
candidates. Certainly, examples can be provided of corporations turning to external turnover specialists
(sometimes called "hatchet men") to regain their past success by firing "deadwood" and eliminating
popular, but unprofitable divisions, units, and projects. The probability of hiring an outsider to lead a
firm in difficulty increases if there is no heir apparent, the last CEO was fired, and if the board of

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directors is composed of a large percentage of outsiders. The insider/outsider distinction may not really
be the important issue. The best answer may lie in finding the right person to implement the needed
strategy regardless of where the person is found.

3. What are some ways to implement a retrenchment strategy without creating a lot of
resentment and conflict with labor unions?

The text discusses some of the problems involved in "downsizing"—a program usually used in
implementing a retrenchment strategy. Unless staffing issues are dealt with appropriately in
retrenchment, a situation can develop in which retrenchment feeds on itself and acts to further weaken
instead of strengthening the company. The text proposes six guidelines for successful downsizing:

-Eliminate unnecessary work instead of making across-the-board cuts;

-Contract out work that others can do cheaper;
-Plan for long-run efficiencies;
-Communicate the reasons for actions;
-Invest in the remaining employees; and,
-Develop value-added jobs to balance out job elimination.

4. How can corporate culture be changed?

The text points out that communication is key to the effective management of change in culture. Top
management must be committed to a culture change and communicate that commitment to everyone in
the organization. The new culture must be part of a "strategic vision" which can capture the emotions of
the employees. A series of programs need to be established to move the corporation from one culture to
another and a strong rationale given to justify such a radical change. Progress toward the goal must be
measured at intervals and results communicated widely. A system of incentives also must be developed
to reward those who support and encourage the culture change.

5. Why is an understanding of national cultures important in strategic management?

An understanding of different national cultures is important in all aspects of strategic management. Since
international trade is becoming increasingly important, a knowledge of national cultures is important to
environmental scanning. One must scan not only key forces in one's industry, but also different societal
forces in other parts of the world where the company might do business. An understanding of national
cultures is also important to the formulation of strategy. Many cultures are very ethnocentric and do not
like foreigners controlling key parts of their country. In Saudi Arabia, for example, non-Saudis cannot
own land—they can only rent it. Most countries have rules regarding ownership of companies in
industries which are deemed important to that country's welfare (for example, the U.S. defense industry).
A company must have an understanding of these differences if it is to formulate various entry strategies
into different countries or regions. An understanding of different cultures is especially important in
strategy implementation. Because of cultural differences, managerial style and human resource practices
must be tailored to fit the particular situations in other countries. Hofstede found in his research that
national culture is so influential that it tends to overwhelm even a strong corporate culture. In measuring
the differences among five national dimensions from country to country, he was able to explain why a
certain management practice might be successful in one nation, but fail in another. Knowledge of these
kinds of differences is crucial for any multinational corporation. An understanding of national cultures is
also important to evaluation and control. Evaluation and control are covered in Chapter Ten.

ADDITIONAL DISCUSSION QUESTIONS

A1. How might manager-strategy fit be accomplished short of firing current managers?

If the current manager of an SBU is capable, but does not appear to have the skills and experiences
necessary to implement a particular strategy, the company might wish to either provide him/her with
additional training or an assistant having some of those skills/experiences. Unfortunately, since most
companies want to get implementation moving quickly and don't want two managers to do the job of one,

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a better option is to transfer existing managers from one unit to another. Another approach is to consider
the skills and experiences of the existing manager in the process of strategy formulation when choosing
among strategic alternatives. If there is little difference in the expected results from two different
strategies, it makes sense to select the strategy which best fits the existing manager's skills and
experiences.

A2. Does culture follow strategy or does strategy follow culture? Why?

This question derives from the question raised in Chapter 8 regarding the relationship between structure
and strategy. The answer is much the same. To the extent that the formulators of strategy seriously
consider implementation issues in choosing a strategic alternative, they will have to assess the
compatibility of a desired strategy with the present culture. If the desired strategy cannot be
implemented given the present culture, a lot of time, money, and effort will be needed to change the
culture. Research reported in Chapter Nine does support the contention that culture follows strategy. As
shown earlier in Chapter Four, the reverse also appears to be true. The type of culture within a
corporation will act to influence the selection of feasible alternative strategies. To the extent that the
culture derives from the "distinctive competence" of the company, this may be very appropriate. Don't
throw away a good culture just because the current strategy is not as successful as it could be. Some
might even say that a good culture is more important than is a good strategy. Clearly, both strategy and
culture are very important and need to be carefully evaluated before any significant change in either is
recommended. Both strategy and culture affect each other simultaneously.

A3. Compare and contrast action planning with Management By Objectives.

An action plan states what actions are going to be taken, by whom, during what time frame, and with
what expected results. Action plans are the primary means by which programs are developed for the
implementation of strategy. Management By Objectives is also a technique useful for the development
of programs. Like action planning, MBO pinpoints individual responsibilities for each unit objective and
specifies a time frame when that objective is to be achieved. Unlike action planning, however, MBO
takes a more organization-wide approach to planning implementation programs and budgets. For MBO
to work, it should be a complete system. Action planning can be done, in contrast, at the individual level
only. The key difference is that MBO is a system of hierarchical objectives beginning at the top of the
corporation and cascading down through the divisions and work units. MBO also encourages the superior
to negotiate the subordinate's objectives with the subordinate's input. MBO includes action planning as
part of the discussions between a manager and his/her subordinate. Action planning alone, however, can
be done strictly on a top down basis with little to no input from the subordinate.

A4. What value does a Total Quality Management program have in implementing strategy?

Total Quality Management (TQM) is an operational philosophy that stresses commitment to customer
satisfaction and continuous improvement. It aims at improving quality, increasing flexibility, and
reducing costs in order to better satisfy the customer. Because TQM aims to reduce costs as well as
improve quality, it can be used as a program to implement both an overall low cost or a differentiation
business strategy. Like MBO, Total Quality Management helps keep employees' minds on a crucial
objective of strategic management—increasing sales and profits by pleasing the customer. Since the
mission of most business firms is customer driven, TQM helps to clarify and fine tune the company's
mission statement. TQM makes the key point that since competitive advantage is usually only
temporary, the organization must emphasize continuous improvement to improve product quality and
reduce costs. According to TQM, customers can be internal as well as external to the organization. To
the extent that a company is able to continually improve its service to its internal customers, it is more
likely to keep internal transaction costs low and thus be in a better position to reap the benefits and avoid
the disadvantages of vertical integration.

A5. How can MBO help improve the implementation of strategy?

Management By Objectives is a powerful implementation technique because it is a system that links

plans with performance. It forces managers to communicate to their subordinates the objectives of the
overall business unit so that a subordinate is better able to see how he/she fits into the company's goal

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accomplishment. MBO, therefore, acts to tie together corporate, business, and functional objectives, as
well as the strategies developed to achieve them. This tying together forms a hierarchy of objectives
similar to the hierarchy of strategy mentioned in Chapter One. The mutual give and take plus the sense
of personal responsibility exemplifying a successful MBO program serves to motivate employees to help
implementation activities succeed.

SUGGESTIONS FOR STRATEGIC PRACTICE EXERCISE

This is a fun exercise that provides students some insight into their own personality and how they
compare with others in their decision-making style. First, ask the class to complete the Myers-Briggs
inventory on page 226 before class. They should also score themselves using the scoring form on page
227. When the students come to class, have them give you a sheet of paper with their name and scores
for each of the four decision-making styles: ST, SF, NT, and NF. As indicated in the text on page 227,
put them into groups so that each group contains people with the same predominant style. Give each
group around 30 minutes to form a new entrepreneurial venture. Give them no further information—
keep it deliberately vague. If you are asked questions, turn the question into a question, such as by
asking "What do you think?" When time is up, ask a spokesperson from each group to (1) describe the
process the group went through and (2) present orally each group's ideas. After each group makes its
presentation, ask the class as a whole to identify each group's dominant decision-making style in terms of
how they did their assignment.

You may want to lecture a bit about the Myers-Briggs Inventory and about each of the four styles. See
the seventh edition of Organizational Behavior by Hellriegel, Slocum, and Woodman (West Publishing,
1996), pages 108 to 134. Of especial interest is the information on different cultures on page 113. The
authors point out that Canadian students strongly prefer thinking, a problem-solving style that tends to be
logical, impersonal, and objective. This results in quick, impersonal, and analytically-based decisions,
with rapid closure on fact-finding as soon as enough information is available for the decision. In
contrast, Japanese students show a strong preference for a more feeling-based problem-solving style that
emphasizes the human element. These groups do not make decisions quickly and appear to be very
adaptable to new situations.

This exercise was suggested by Franklin Ramsoomir in "Relating Theoretical Concepts to Life in the
Classroom: Applying the Myers-Briggs Type Indicator," Journal of Management Education (February,
1994), pages 111-116. In his study, Ramsoomir found the following marked differences:

• Sensation-thinkers (STs). This group usually sought further clarification from the instructor by
asking a lot of questions. They tended to decide on a venture within the first 5 minutes and moved to
feasibility and market surveys. They tended to focus on high-tech new ventures, such as software.

• Sensation-feelers (SFs). Members of this group usually appointed a representative to speak with the
instructor. Questions, such as "Do you expect an organization chart with our proposal?" were very
direct and concise. The group worked very methodically and made decisions based on majority
voting. They tended to propose management consulting as their venture.

• Intuitive-thinkers (NTs). This group tended to ask questions peripheral to the exercise, such as "Did
you say we have 30 minutes to do this?" Many ideas were proposed. The group worked to develop a
decision-making process to select the best of the many ideas. This group tended to have a loud, but
controlled session.

• Intuitive-feelers (NFs). This group tended to generate many ideas ranging from impression
management consulting to very unorthodox entrepreneurial concepts. They sought very little
additional information from the instructor. Their noisy, animated session focused primarily on
which of the many ideas would work the best. This group always seemed to have too little time to
finish the assignment.

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Ramsoomir found that his class of Canadian students usually included more STs and SFs than NTs and
NFs. He therefore needed two or more groups of STs and SFs to every one of NT or NF. This is not
surprising given the general emphasis in business schools on logical thinking.

Use this exercise to illustrate how important it is to consider personality differences when staffing an
organization. Should creative, entrepreneurial firms have a larger number of NTs and NFs than STs and
SFs? Do large bureaucracies thrive on STs to the disadvantage of NFs? What is the best style for
strategic decision-making? Should a strategic planning committee be composed of a mixture of all four
styles or of just one style?

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