PSYC 651 Week 3 Weekly Reading Summary 3 Example

Weekly Reading Summary 3: Linking Strategic Plans to Unit and Individual Goals, and Why Top Management Commitment Matters

Introduction

Aguinis (2013) argues in chapter 3 that performance management depends on strategic planning. Unless individual goals grow out of the organization's strategy, employees can work hard on the wrong things. This summary develops four themes: the nature and purposes of strategic planning, the environmental analysis that informs it, the mission, vision, goals and strategies that result and the process of linking those to unit and individual goals.

What Strategic Planning Is For

Strategic planning, as Aguinis (2013) describes it, defines what an organization wants to achieve in the future and how it will get there. It helps organizations anticipate change, set priorities and allocate resources. For performance management, its key contribution is direction: it tells managers which results and behaviors matter most, so that performance planning has something meaningful to connect to. Without a plan, managers fall back on whatever is easiest to count, which may have little to do with where the organization is trying to go.

Reading the Environment

Planning begins with an analysis of the environment. Externally, organizations look for opportunities and threats in their markets, technology, regulation and competition. Internally, they assess their strengths and weaknesses, including the skills of their workforce. Aguinis (2013) notes that this analysis is often summarized as a SWOT analysis and that its findings shape everything that follows, including which competencies employees will need.

From Mission to Strategy

The analysis leads to a mission statement describing the organization's purpose, a vision statement describing what it hopes to become, goals that specify what it wants to accomplish and strategies describing how it will reach those goals. Each element narrows the one before it, moving from broad purpose to concrete action. A hospital's mission might speak of healing its community, its vision of becoming the region's most trusted provider, one goal of raising patient satisfaction and one strategy of redesigning nursing rounds.

The Cascade to Units and Individuals

Once organizational goals are set, units develop their own goals and plans in support of them, and individual job descriptions and objectives are aligned with unit goals. Rodgers and Hunter (1991) reviewed 70 studies of management by objectives, a goal cascade of this kind, and found productivity gains in nearly all of them, with much larger gains when top management was strongly committed. Locke and Latham (2002) explain the underlying mechanism: specific, challenging goals focus attention and increase effort and persistence. Aguinis (2013) adds that building support through communication and employee involvement helps the cascade take hold.

Conclusion

The chapter shows that strategic planning gives performance management its direction, beginning with environmental analysis, moving through mission, vision, goals and strategies and cascading to units and individuals. A regional hospital whose strategy emphasizes patient experience could apply this by setting a system goal of improving satisfaction scores, asking each nursing unit to set a goal on response times to call lights and including in each nurse's objectives a specific target for hourly rounding. The research on management by objectives suggests that visible commitment from hospital leaders would decide whether the cascade succeeds.

References

Aguinis, H. (2013). Performance management (3rd ed.). Pearson.

Locke, E. A., & Latham, G. P. (2002). Building a practically useful theory of goal setting and task motivation: A 35-year odyssey. American Psychologist, 57(9), 705-717. https://doi.org/10.1037/0003-066X.57.9.705

Rodgers, R., & Hunter, J. E. (1991). Impact of management by objectives on organizational productivity. Journal of Applied Psychology, 76(2), 322-336. https://doi.org/10.1037/0021-9010.76.2.322