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
• Strategy The hard elements are factual and
easy to identify. They can be
• Structure found in strategy statements,
corporate plans, organization
• Systems charts, and other documentation
• Style The Soft S’s
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 PROCUREMENT MARKETING & FINANCE PROJECTS

Head- Ashoke kr Ghosh Rabin Mukhopadhyay SALES Head - Ujjal Head- J.Chatterjee Head - Gaur Hari Guchhait
De

GM- FINANCE

PURCHASE STORES LOGISTICS

DGM- FINANCE

Chief Manager-
FINANCE

Manager Manager Corporate Manager Plant Manager Manager Manager Payroll

Treasury Accounts – Finance & Marketing Finance Taxation & Fund
Accounts

OFFICER- Taxation

The hierarchy that has been shown for the finance department is same for all the other SBU’s.
 Organizational Structure In
HPL.
Organization Chart
1. formal reporting relationships - High
2. levels in hierarchy - High
3. spans of control - High
4. Departmentalization- High

Functional Structure - functional

structure with
horizontal linkages
Systems to
facilitate:
• Coordination
• Communication
 Ladder of Mechanisms for
Horizontal Linkage and

H IGH Teams
Coordination Required

Full-time Integrators
Amount of Horizontal

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 transaction-
oriented, 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 & + Setting
Leadership
the
budgeting
direction
Organizing & + Aligning
people
staffing
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

85% of executive
Only 25% of 9 of 10 teams spend less
managers have Companies Fail than one hour per
incentives linked to to Execute month discussion
strategy Strategy strategy

60% of
organization don’t
link budgets to
strategy

One Can’t Manage Strategy With a System Designed for Tactics

Source: CFO Magazine 20
Survey
 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 – What we aspire to

be

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

26
 Internal Business
Perspective
• At what must HPL excel currently?
– Manufacturing/service excellence
– New product/service introduction
– Quality
– Cycle time
– Backlogs

27
 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

29
 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

30
 Overall Concepts
• Not a quick process
– Implementation requires
• Thought
• Analysis
• Data-gathering
• Time

31
 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…

33
 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

34
 Implementation Steps
• Expand consensus
– Larger group refines tentative scorecard
• Finishing touches
– Consensus on vision, objectives,
measures, targets, implementation
program, etc.

35
 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

36
 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

37
 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

38
 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.”

39
 Over To You

THANK YOU