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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

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. organization • Systems charts. . They can be • Structure found in strategy statements. corporate plans. McKinsey 7-S Model The Hard S’s • Strategy The hard elements are factual and easy to identify.

FINANCE Chief Manager- FINANCE Manager Manager Corporate Manager Plant Manager Manager Manager Payroll Treasury Accounts – Finance & Marketing Finance Taxation & Fund Accounts OFFICER. .Chatterjee Head .J.Gaur Hari Guchhait De GM.Ashoke kr Ghosh Rabin Mukhopadhyay SALES Head .Taxation The hierarchy that has been shown for the finance department is same for all the other SBU’s.FINANCE PURCHASE STORES LOGISTICS DGM. Organizational Structure of HPL MD Swapan Kr Bhowmik MANUFACTURING PROCUREMENT MARKETING & FINANCE PROJECTS Head.Ujjal Head.

spans of control . levels in hierarchy . Organization Chart 1.High 4. Departmentalization. formal reporting relationships .High 2. Organizational Structure In HPL.functional structure with horizontal linkages Systems to facilitate: • Coordination • Communication .High Functional Structure .High 3.

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? .

It has had a significant strategic role in the Company's growth process and continues to do so. . 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. Staff Ø Human Resource Development at HPL has been an integral part of the Company since its inception. HPL today boasts of a strong online competency profiling system for its employees. ü Importance should be given to the ways of introducing new employees and managing careers. It is a function that has contributed to the bottom line of the Company and has built the HPL family.

Style / Culture The culture of the organization. consisting of – Organizational culture: the dominant values.e where they spend their time and attention. what they reward. what they allow. HPL follows 3 following rules those are reflected from their Vision statement. 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. 2. Respect for Individual 3. etc) • HPL basically follows an External Control System where decision making authority rests with the top management – Centralized in practical operations Regarding organisation culture . Dedication to Excellence . Customer Satisfaction 4.

their services and products so as to become the best. sincere and open in their dealings. Fairness: A commitment to be objective and transaction- oriented. their teams. Pursuit of Excellence: A commitment to strive relentlessly. 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. to constantly improve themselves. thereby earning trust and respect.

From Gray & Larson “Project Management: The Managerial Process” .How a company can consciously create Source:.

dysfunctional conflict – Factors: goal incompatibility. information and decision control – Personal power: expert. referent (based on identification and admiration) . control of resources. We can observe the following types of conflict there in HPL – Relationship or interpersonal conflict – Task / process conflict – Functional vs. differences • Power – the capacity to influence behavior – Positional power: rewards/consequences. limited resources. Culture in practice • Conflict management HPL is a public sector unit as a result bureaucracy and power distance and conflict is prevalent there.

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 .

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.Implementation of McKinsey 7-S Model • Effective organizations achieve a harmony between these seven elements. determine current state and ideal state of each element.e. and develop action plans to close the gaps • In change processes. many organizations focus their efforts on the . i.

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 .

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

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 .

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

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 .

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

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 .

objectives. etc. targets. measures. implementation program. Implementation Steps • Expand consensus – Larger group refines tentative scorecard • Finishing touches – Consensus on vision. 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 interesting ones 36 . not too few • Focus on critical measures.

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 .

” 39 . 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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