Strategic Planning

The importance of change in the strategic planning process

By Machelle TenBroeck and Janet Crabtree June 18, 2008

The ever-changing global marketplace requires managers to strategically plan for all contingencies. One of the most important parts of strategic planning is the external and internal environment. According to Carter McNamera, there are four models of strategic planning:

1. Basic Strategic Planning is a process typically followed by organizations that are extremely small, busy, and have little experience with strategic planning. The entire process might be implemented in year one of the to get a sense of how planning is conducted, and then embellished in later years with more planning phases and activities to ensure a well-rounded direction. Top-level management usually carries out the planning.

2. Issue (or Goal) Based Strategic Planning often evolves from organizations that began with the “basic” planning approach described above. This is a more comprehensive and more effective type of planning.

3. Alignment Strategic Planning models are used to ensure strong alignment between an organization’s mission and its resources. The goal is to effectively operate the organization and is useful for organizations that need to fine-tune or improve strategies making them more effective. An organization might choose this model if it is experiencing a problems with internal efficiencies.

4. Scenario Strategic Planning might be used in conjunction with other models to ensure planners use strategic thinking. The model may be useful, particularly in identifying strategic issues and goals.

All of these models contain similar elements including a focus on external and internal environments.

Strategies should change with the organizational life cycles that all organizations go through from infancy to maturity.  Organizations should analyze the external and internal environments through the entire lifecycle. In the book, 5 Life Stages of Nonprofit Organizations (Wilder Foundation, 2001), the author, Judith Sharken Simon, provides another perspective on life cycles of organizations. She identifies five life stages as follows:

Stage 1: Imagine and Inspire "Can the dream be realized?"

Stage 2: Found and Frame "How are we going to pull this off?"

Stage 3: Ground and Grow "How can we build this to be viable?"

Stage 4: Produce and Sustain "How can the momentum be sustained?"

Stage 5: Review and Renew "What do we need to redesign?"

In conclusion, managers must be aware of all forces that affect the business and make decisions based on the ever-changing needs of the organization.

Work Cited

McNamara, Carter, MBA, PhD, Authenticity Consulting, LLC. Basic Overview of Various Strategic Planning Models, 2006 http://www.managementhelp.org/plan_dec/str_plan/models.htm 

Julian, Scott D., Justis, Robert T., Keels J. Kay An Exploration of the Relative Effect of the Internal and External Environments on Organizational Responses to a Strategic Issue http://www.sba.muohio.edu/management/mwAcademy/2000/31b.pdf 

Retention: Increasing Profits by Increasing Longevity in Technical Services Companies

by Jesse Johnson, Tiffany Smith, and Dan Sorrow (TNU 2008)

Many individuals in the twenty-first century make thousands of dollars a day by simply answering questions for businesses. Questions such as what makes a business successful? Why do some businesses fail while others succeed? What are some of the components of change in a business? This paper will take a more in-depth look at several of these questions and it will look at some of the different components of change. To illustrate these components, the writers of this paper will use a business model known as the Storms of Chaos Model (Stevens). The various components that make up this model are the storm itself, the waves generated by the storm, the lightning from the storm, the ship riding in the storm, and the buoyancy that keeps the ship afloat in the storm. Before addressing each topic individually, the focus will be on the history and the background of the problem that has created this chaotic storm. The storm issue addressed in this paper involves an employee retention situation within Engineering and Technical Services Companies.

Many times these companies suffer a considerably high colleague turnover rate. The number of colleagues separating over the last two years has remained steady. One company reported that twenty-two colleagues separated in both 2005 and 2006. This turnover decreased staffing levels from a 2005 figure of forty-two employees in comparison to today’s thirty active colleagues.

Low retention creates a considerably negative impact on their region as a whole. High turnover rates influence team synergy, customer relationships, and region expenses. One example of this is increased employee workloads to continue accomplishing mission objectives. This often results in burnout and frustration. High colleague turnover affects customer relations as well. Customers are seeking a consistent point of contact in order to meet their needs. Additionally, the cost of training new employees has an impact on expenses. In 2006, the one company lost 29 million dollars due to colleague turnover alone.

     I. The Storm

The storm represents threatening, competition, societal, political, and other enemy forces (Stevens).

“The major challenge management faces today is living in a world of turbulence and uncertainty where new competitors arrive on the scene daily & competitive conditions change” (Blanchard, Hersey, and Johnson 3). Technical companies constantly require additional employees due to current business growth rates. Managers have limited time to provide individual training prior to a new employee starting work. It is common for a new employee to work anywhere from one to three months before attending official training. When training does take place, colleagues have to provide much of it. The high stress, fast pace, and fierce competition of the job itself is extremely challenging for new hires within the company. Due to the stressful environment, the turnover rates continue to rise year after year. Increased turnover causes remaining employees to incur additional responsibilities due to the vacancies of separated employees.

Furthermore, in the cutthroat world of business, it is quite common for competitors to keep an eye on the new technical employees being trained. Once a company incurs the expense of training the new employees, competitors will not hesitate to swoop in and offer these newly trained employees a larger salary with better benefits. This practice ensures the competition of a constant flow of well-trained employees as well as a constant drain on larger companies' financial and human resources. Although non-competes are often signed by each colleague when they are hired, non-competes are useless unless every single colleague is pursued. Pursuing former employees, who are guilty of violating their non-compete, is not common practice by many companies because of the expense, time and good will factors.

     II. Waves

In this model, waves represent events seen in advance. These events are predictable. Some corporations are able to adjust to the oncoming waves. They may be nimble enough to ride the wave to shore, while another corporation sinks. Frequently the same wave will benefit one organization while sinking another. 

The waves of change in a large technical company typically bring changes in staffing and retention. Years ago, it was not unheard of for employees to stay at one company for the majority of their career. It was common practice for an individual to build a career at one company. They would climb the corporate ladder in anticipation of success. Switching jobs frequently, or job-hopping, was not common. In fact, potential employers frowned upon job-hopping. Many times with only one breadwinner per family, stability was the primary motivator; therefore, they were unlikely to switch jobs frequently. The workforce operated on an unwritten contract of mutual loyalty. Employees stuck with their employer; in turn, the employer took care of the employee (Dibble 25).

The informal employment contracts of the past existed on conditions far different from those that exist today. Employers were unequivocally in the driver’s seat of the employer/employee relationship. For example, 401K benefits did not exist, and the employer or perhaps distant stockholders owned stock. Employers set the terms of employment in their company. If employees were unhappy with the terms, they could simply leave. Employers tended to treat their employees well because such treatment provided them with the security of capable and loyal workers. Additional job satisfaction factors also included unions negotiating increases in pay, benefits, and working conditions. Unintentionally, unions improved conditions for non-union employees as well (Dibble 28).

Today’s employee feels that he or she must look out for number one and have full control of their career at all times. Influencing this frame of mind is the trend of organizational downsizing. Organizations must take risks and generate creative ideas if they would like to remain competitive in today’s labor market. Because of this risk taking behavior, companies succeed or fail at a rapid pace. The success of a company depends largely on how they compare to their competitors in regards to employee satisfaction (Judy and D’Amico 52).

According to author Fredrick Reichheld, “Many organizations claim that employees are their greatest asset and key factors to the success of the business; however, when profits are down, they react by lying off these invaluable assets” (15). Companies choosing to lay people off when times get tough will inevitably create disloyalty within their organization. Reichheld also notes, “Many companies who layoff employees will significantly under perform in years to come due to the tone employee disloyalty has created” (17). Due to the tight labor market, highly skilled employees have the flexibility to determine how often they will switch jobs. Those employees are able to name their salary at each new opportunity. This trend has had a significant impact on the turnover rate nationwide. In 1999, employee turnover skyrocketed to the highest rate in almost twenty years. According to a survey conducted by BNA, Inc. 1.2% of the workforce left their jobs each month during 1999 in comparison to1.1% per month in both 1997 and 1998, and .9 % in 1996 (Cooper 1). Unfortunately, this trend shows no sign of slowing down.

Compared to other generations, which would often remain at one company for their entire career, some perceive Generation X employees as less loyal to their employers. Many Generation Xers perceive their organizations as a place to learn new skills and broaden experience levels. The current opportunity [exists] as a springboard for improved future opportunities (Kaye & Jordan-Evans 22). Unlike their parents, Generation X individuals are more likely to leave if they are not satisfied with the experience they are having at a company (Poskaitis 10).

     III. Lightning

In the storms of chaos model, lightning is any sudden and unexpected event that takes place. One example of this would be the tragedy of the September 11^th terrorist attacks. Simply put, this unforeseen and unpredictable event radically changed the way many organizations did business.

Prior to 9-11, jobs were plentiful and the employment market thrived. When the tragedy occurred, the staffing industry was one of the first businesses to suffer and they continued to do so for three years. During this time, there were more people available and not enough jobs. Now the labor market has reversed and companies are suffering a people shortage, in part because of the aging and retirement of the Baby Boomer generation. According to a projection figure by the U.S. Bureau of Labor Statistics, there will be 151 million jobs by the year 2009, with only 141 million people employed (Kaye & Jordan-Evans 45). According to the study conducted by the Workplace Resource Learning Center, replacing employees will cost an organization an average of $14,000 for employees with a high school education and an average of $66,000 for those with college educations (Cornick 2).In addition to the tangible costs mentioned above, employee turnover will influence customer relations. In 1992, Sears came up with a plan to enhance employee attitude as well as retention. This positively influenced customer service, satisfaction, and retention, therefore ultimately increasing revenue. The results of this plan indicated a five-point improvement in employee attitudes that drove a 1.3-point improvement in customer satisfaction. These improvements ultimately increased one corporation’s revenue by .5% (Terez 17).

One of the most common assumptions made by employers identifies pay as the motivator to seek alternative employment opportunities. However, many companies paying employees at competitive rates are still troubled with high employee turnover rates. A study conducted by Robert Half International Inc., polled 150 executives employed by the 1,000 largest companies in the United States to find out the primary reasons people are leaving companies. Only 15% of the executives surveyed stated money as the determining factor in leaving a job (Grossman 2).

Non-monetary issues such as flexible work schedule, benefits, and training are just some of the reasons why employees [flee] to other companies (Ettore 9). A study conducted by Ranstad Consultants polled more than 6,000 American employees in regards to the factors motivating them to stay at their current place of employment. According to the survey results, money was not nearly as much of a factor as one may have assumed. The employees participating in this survey listed the following as the most important factors motivating them to stay with their current employer: liking the team they worked with, a pleasant work environment, an easy commute, challenging work, job security, ability to work independently, and opportunity for advancement (Jackson 2).

Harkins identifies five reasons why employees begin to seek alternative employment opportunities. They are the confidence factor, the emotional factor, the trust factor, the fit factor, and the listening factor. The confidence factor involves the employee’s confidence that the organization is moving in a positive direction towards a long-term mission. The emotional factor