(Week 4 suggests students complete and submit for feedback Step 7 and Step 8.)
Step 7 has four major components embraced under the general topic heading, Critical Resources. In the introduction to Step 7, there are several excellent links leading to works on Resourceâ€“Based Theory and Resource Dependency Theory. These are important concepts toward understand the decisions organizations make that affect how critical resources are prioritized and managed.
Resource dependency determines what an organization needs to survive and accomplish its objectives. It determines the strategy an organization pursues to accomplish various objectives, including considerations and effects on profit, control, size, structure, technology, and physical space. For example, we would all agree that McDonaldâ€™s business needs require it to have large inventories of bread (sandwich rolls to be exact) available as a resource. Without bread, McDonaldâ€™s would be in real trouble. Bread is a resource need that will affect McDonaldâ€™s decisions on many aspects critical to its business model, as related to the critical resources Step 7 raises (HR, Technology, Physical Space, and Financial).
McDonaldâ€™s must decide to buy the bread it needs from an external source (the economic concept of â€œhorizontal integrationâ€) or make the bread itself internally (the economic concept of â€œVertical Integrationâ€). As you can see, either decision has a large impact on McDonaldâ€™s human resource, technology, financial and physical asset needs. If McDonaldâ€™s decides to make the bread itself in needs bakery skills, baking technologies, appropriate work space, and a cost-benefit assessment of the financial gain or loss and other forms of business risks for taking on such an effort in-house as opposed to contracting out for to fulfill the needs for its bread supply.
For the purpose of your situation audit, the Step 7â€™s four critical resources are:
Human Resources: A core competency (Step 4) may require organizations to attract and retain certain employees with specific skills to sustain — Microsoft, Apple, and Google are competing for the same talent pool of individuals with superior programming skills, for example. How do they compete with each other for this talent pool? Why does an employee select one organization over another for which to work? How are such employees motivated, rewarded, and evaluated?
In effect, the HR critical resource asks you to summarize your organizationâ€™s ability to do the following: (1) acquire the people (sometimes referred to as talent) needed to accomplish its mission, goals, and objectives; (2) place people where their knowledge, skills, and abilities (KSAs) can be leveraged for maximum competitive advantage; and (3) motivate, train, mentor, and, evaluate employees.
Financial Resources: Your goal for this report is to present a high-level discussion of your organizationâ€™s financial situation — a financial overview of the organization financial statement and the system used to manage financial resources so that they are directed toward meeting MVGOs. Put very simply, your report should explain how your organization acquires and manages the financial resources it needs to support its MVGOs and implement its strategy. The section on financial resources includes an excellent link that explains in basic terminology how to read a financial statement.
Technology Needs: Acquisition, use, and effective management of advanced information and computing technologies are essential in todayâ€™s increasingly sophisticated technological world. Technology has emerged as a competitive advantage (see Step 5) in an increasingly competitive and global marketplace. You are to describe key technologies and the manner in which your organization uses those technologies to achieve its internal (e.g., employee communications) and external (e.g., satellite communication for intelligence gathering) MVGOs. Some issues to consider are: marketing, customer relations, service delivery, internal communications, internal collaboration, and the planning, management and governance of technology use. See link to Technology Management in Step 7.
Physical Resources: Physical resources refer to the physical property of the organizationâ€” buildings, improvements, capital equipment (i.e., equipment used to buy or sell products or services), and current inventory. In other words, physical resources are all the non-human, tangible, physical property the organization owns or has at its disposal. Different resources contribute differently to the organizationâ€™s performance, depending on the type of goods being produced or the service being provided. In terms of economic and utility consequences, the value of physical resources can be measured by various computations such as depreciation, which generally impacts taxes paid, and contribution margin, which estimates the relative value of one resource in comparison to other resources. Both concepts are explained in the suggested reading linked to Physical Resources in Step 7.
Note: The type of organizations you work for will have different needs that determine the relative importance of each of the critical resources for your particular organization. Some organizations may require highly specialized employee skills; others, may have advanced technology or unique space requirements. As a result of the differences among organizations and their missions, the length or emphasis of each of the discussions of the four critical resources may vary among students. In other words, some critical resources many require greater length to describe and analyze than other critical resources depending on the type of organization being evaluated.
This step directs your focus to the organizationâ€™s leadership. Management styles, leadership styles, control systems and governance structures have an immense impact on the successful execution of the MVGO, strategy, resource allocation, competitive advantage, and several other facets of organizational survival. Remembering that your report is, in theory, intended for new employees and-or new board members, you will be writing a general overview of the following factors that the report is requesting. Some of these factors maybe more relevant to your organizationâ€™s effectiveness than others. Accordingly, you may desire to emphasize some of the following areas more than others. However, this step requires you to conduct research, using material embedded in the links, in order to prepare a summary of the following:
Leadership Styles Analysis— management theorists have repeatedly analyzed various management and leadership styles within a variety of organizational contexts. These styles include: Participative Management; Theory Y; Theory X; Theory Z; Total Quality Management (TQM); Management by Walking Around; Management by Objectives; Employee Empowerment; and numerous others. See link in Step for descriptions and details to facilitate your determination of the style that prevails in your organization and determine if another style could be more effective.
Management Control Systems — sources of management control problems often stem from one or more of these factors: lack of direction; lack of understanding of objectives, strategies and vision; motivation problems among workers; and personnel limitations in terms of skills development and training deficiencies. Three broad categories of effective organizational controls to address various concerns such as those noted, include: results control, action control, and people control. See link in Step for descriptions and details to facilitate your analysis of the types of systems and controls needed to address issues of concern.
Organizationâ€™s Leadership — a description of the key facets of leading the enterprise and the associated roles for so doing can be found in the link in Step 8.
Organizationâ€™s Governance — are mechanisms for oversight and review that are independent of the organizationâ€™s leadership and management (e.g., Board of Directors). Key issues to consider could be whether your governance structure is established by law, as is the case for publicly traded companies or established by constitutional authority, as is the case with many enforcement agencies in the government and the military. See link in Step for numerous questions to determine which type of governance applies to your organization. See link in Step for descriptions and details.