Subhayan 7s Model.

MC KINSEY 7S Model in Haldia

By: Subhayan Basu

Agenda….

Organisation Structure of Haldia ØHow 7Petrochemicals S strategy can Ltd. be properly implemented in HPL? ●

HALDIA PERTOCHEMICALS LTD. • Haldia Petrochemicals Ltd (HPL) is a competitive modern naphtha based Petrochemical Complex located 125 kms from Kolkata, at Haldia, West Bengal, India. • HPL is the second largest petrochemical industry in India with a total capacity equivalent to 5, 20,000 TPA of ethylene. Process technologies for various manufacturing plants have been selected from internationally renowned vendors with an aim to produce world class products with excellent safety and environment considerations. Notable process technology suppliers and contractors for the project

MC KINSEY 7-S MODEL

McKinsey 7-S Model • • • • • • •

The Hard S’s

The hard elements are factual and Strategy easy to identify. They can be Structure found in strategy statements, corporate plans, organization Systems charts, and other documentation The Soft S’s Style The soft elements are difficult Staff to describe since they are continuously developing and Skills changing. They are highly determined by the people at Superordinate goals work in the organization.

Organizational Structure of HPL MD Swapan Kr Bhowmik

MANUFACTURING Head- Ashoke kr Ghosh

PROCUREMENT Rabin Mukhopadhyay

MARKETING & SALES Head - Ujjal De

PROJECTS Head - Gaur Hari Guchhait

FINANCE Head- J.Chatterjee

GM- FINANCE PURCHASE

STORES

LOGISTICS

DGM- FINANCE Chief ManagerFINANCE

Manager Treasury

Manager Corporate Accounts

Manager Plant – Finance & Accounts

Manager Marketing Finance

Manager Taxation

OFFICER- Taxation

The hierarchy that has been shown for the finance department is same for all the other SBU’s.

Manager Payroll & Fund

Organizational Structure In HPL. Organization Chart 1. 2. 3. 4.

formal reporting relationships - High levels in hierarchy - High spans of control - High Departmentalization- High

Functional Structure - functional structure with horizontal linkages

Systems to facilitate:

• Coordination • Communication

Ladder of Mechanisms for Horizontal Linkage and Teams

Amount of Horizontal Coordination Required

H IGH

Full-time Integrators Task Forces Direct Contact LOW

Information Systems LOW

HIGH

Cost of Coordination in Time and Human Resources

Systems Formal and informal procedures that support the strategy and structure (Systems are more powerful than they are

Various Elements in Systems

ØCommunications practice and system ØManagement reporting system ØApproval process ØPlanning/budgeting system ØRewards system including appraisal

Structure For proper utilization of the Structure the following steps can be followed in HPL • Tasks define jobs • Jobs define skills required • Skills (and other considerations) define staff – Over time skills change as staff gains knowledge and experience, and as technology and corporate infrastructure mature

• Collection of jobs basis for structure

Skills • Distinctive competencies – what the company does best, ways of developing or shifting competencies • In case of HPL while Job Design it is to be considered whether the existing employees have the necessary skills and knowledge to fulfill proposed / expanded job requirements?

Staff Ø Human Resource Development at HPL has been an integral part of the Company since its inception. It has had a significant strategic role in the Company's growth process and continues to do so. It is a function that has contributed to the bottom line of the Company and has built the HPL family. HPL today boasts of a strong online competency profiling system for its employees. ü It is to be kept in mind that the people of HPL are ways of shaping their basic management values ü Proper HR management processes should be used to develop new managers who can lead the organisation. ü Importance should be given to the ways of introducing new employees and managing careers,

Style / Culture The culture of the organization, consisting of – Organizational culture: the dominant values, beliefs and norms which develop over time and become relatively enduring features of organization life – Management style: The precise way in which the control system influences the behavior depends on the style of functioning of the manager (i.e where they spend their time and attention, what they allow, what they reward, etc) • HPL basically follows an External Control System where decision making authority rests with the top management – Centralized in practical operations Regarding organisation culture , HPL follows 3 following rules those are reflected from their Vision statement. 2. Respect for Individual 3. Customer Satisfaction 4. Dedication to Excellence

Culture at HPL HPL may consider the following points for further betterment of their organisation culture Customer Delight: A commitment to surpassing the customer expectations. (and not only fulfilling) Leadership by Example: A commitment to set standards in the business and transactions and be an exemplar for the industry and their own teams. Integrity and Transparency: A commitment to be ethical, sincere and open in their dealings. Fairness: A commitment to be objective and transactionoriented, thereby earning trust and respect. Pursuit of Excellence: A commitment to strive relentlessly, to constantly improve themselves, their teams, their services and products so as to become the best.

How a company can consciously create

Source:- From Gray & Larson “Project Management: The Managerial Process”

Culture in practice • Conflict management HPL is a public sector unit as a result bureaucracy and power distance and conflict is prevalent there. We can observe the following types of conflict there in HPL – Relationship or interpersonal conflict – Task / process conflict – Functional vs. dysfunctional conflict – Factors: goal incompatibility, limited resources, differences

• Power – the capacity to influence behavior – Positional power: rewards/consequences, control of resources, information and decision control – Personal power: expert, referent (based on identification and admiration)

Solution:- there should be a congruence between the

Management + Planning & + Leadership the

Setting

budgeting direction Organizing & people staffing

+

Aligning

Management is about Controlling & coping + with complexity Leadership is about coping with Motivating people change

Implementation of McKinsey 7-S Model • Effective organizations achieve a harmony between these seven elements; if one element changes, then this will affect all the others • The 7-S Model can be a valuable tool to initiate change processes in HPL and to give them direction; i.e. determine current state and ideal state of each element, and develop action plans to close the gaps • In change processes, many organizations focus their efforts on the

Strategy… Maximising Value…

The Basic Issue Only 5% of the work force understands the strategy

Only 25% of managers have incentives linked to strategy

9 of 10 Companies Fail to Execute Strategy

85% of executive teams spend less than one hour per month discussion strategy

60% of organization don’t link budgets to strategy

One Can’t Manage Strategy With a System Designed for Tactics Source: CFO Magazine Survey

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Objective for HPL • Motivate all managers and employees to successfully implement the business unit’s strategy • Companies who incorporate their strategy and measurement system better able to execute their strategy

Why is it Important for HPL? • The model describes the organisation’s vision of the future to the entire organization. It also creates shared understanding. • It’s a complete model that enables employees to see their contributions to success. • This model focuses change efforts. If the right objectives and measures are identified, successful implementation will likely occur. 22

To be The Strategy Focused Organization Mission

– What we do

Vision be

–

What we aspire to

Strategies – How HPL accomplish their goals Measures – Indicators of our 23

Outcomes and Performance Drivers • Performance Drivers are the lead indicators. • They reflect strategy. • The 7S model should have (or consider) a mix of outcome measures and performance drivers. • The mix should be customized to the particular business unit’s strategy. • The Model must retain a strong emphasis on outcomes, especially financial ones. • Change in an organization should not be an end in itself, but a driver to reach 24

While strategy implementation the following two this are to be kept in mind :-

• Balance between

– Measures of current performance – Long-range competitive abilities

• Four aspects of firm performance – – – –

Financial Internal business Customer Innovation and learning

Financial Perspective for HPL • How do we look to stockholders? – Does the company exhibit the ability to survive, succeed, and prosper? – May include traditional external measures • Net income • Cash flow • Market share

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Internal Business Perspective • At what must HPL excel currently? – Manufacturing/service excellence – New product/service introduction – Quality – Cycle time – Backlogs

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Customer Perspective Here HPL has to consider the following points • How do our customers (and other external stakeholders) see us? (w.r.t. the following parameters) – New products – Responsiveness – Quality – Service – Reputation 28

Innovation and Learning Perspective • Can HPL continue to improve and create value? – Technological leadership – Time to market – Employee training and satisfaction – Research and development measures – Investments in new technologies

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Perspectives are Interrelated • Emphasizes the synergies, relationships existing within the company and with its external constituencies – Innovation pleases customers which are necessary for good financial results – Good financial results make financing improvements possible

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Overall Concepts • Not a quick process – Implementation requires • • • •

Thought Analysis Data-gathering Time

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Implementation Steps • Initiative must start at the top (given that HPL is a PSU.) – Only senior management has grasp of overall strategy • Authority to make strategic decisions

– Doomed without commitment from the top • Likely to be ignored if senior management does not actively promote the process and resulting scorecard 32

Implementation Steps • Requires teamwork, collaboration – Different perspectives, expertise required • No single person has complete view of the organization

– Greater participation produces greater “buy-in” • Employees feel a sense of ownership…

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Implementation Steps • Interview senior managers – Input on strategic objectives – Input on critical success factors – Input on possible measures

• Conduct individual and group interviews • Work toward consensus

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Implementation Steps • Expand consensus – Larger group refines tentative scorecard

• Finishing touches – Consensus on vision, objectives, measures, targets, implementation program, etc.

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Implementation Steps • Selection of metrics – Must relate to strategic goals – Both leading and lagging – May not be “exact” – May come from external sources – Not too many, not too few • Focus on critical measures, not interesting ones

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Implementation Steps • Roll-out – Link to data bases and information system • Modify information system as necessary to collect and report scorecard measures

– Communicate to employees • What is being measured • Why it is being measured • Their roles

– Develop scorecards for lower levels

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Implementation Steps • Periodic reviews – Has strategy changed? – Are the objectives valid? – Are the activities valid? – Are the measures valid?

• The scorecard evolves with the organization

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THE LAST SENTENCE SUMMARY “The best 7S Model will tell the story of the strategy so well that the strategy can be inferred by the collection of objectives and measures and the linkages among them.”

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Over To You

THANK YOU