The Hindu Business Line : Organisation building the 7-S way

As a fresh recruit out of a B-school campus in the 1980s, I remember exploring the portals of the corporate world.My first assignment was at the corporate headquarters of a reputed business house in South India. Buzzing with conceptual ammunition, I was looking at correlating management mantras with real-time experiences.

Questions like `What is the mission, vision, values of the company,' were foremost in my mind. Before long, I realised the extent of congruence the reality held with theory.

The blockbuster treatise In Search of Excellence by Tom Peters and Robert Waterman brought to focus the characteristics of well-run organisations that had stood the test of time and created an identity for themselves. The organisations that were listed in the book demonstrated characteristics that the leadership actively propagated, practised and sustained despite changes at the helm. Perhaps the longevity we witnessed in the 1970s and 1980s on employee shelf-life correlated with the consistent values that were practised and the sustained leadership styles that were demonstrated.

Were organisations built `consciously'? The question crops up in my mind. And what is our understanding of `organisation building'?

Organisation building can be defined as the set of initiatives or efforts made by the "leadership in the direction of long-term financial performance, people productivity and demonstration of the core values.

Let us delve deeper into the three parameters mentioned above to gain a better understanding of the topic.

Long-term financial performance relates not only to the bottomline of the classic equation, but more importantly refers to the financial ratios and the creation of economic values.

People productivity is essentially the return on investment on every unit of human resource that is deployed.

Sustenance of the core values and beliefs refers to the fabric of consistent work behaviour that gives meaning to the business and provides identity to the organisation.

The current standpoint on organisation building merits evaluation on the basis of the above definition. Barring the few companies that exchange slots within the `Top 10' performing companies, we see the appearance and disappearance each year of many companies lower down the list. The reasons are not far to seek.

The companies doing the vanishing act focus on the first factor relating to financials and not on the other two. The market forces and shareholders' expectations drive the leadership to show quarter-on-quarter improvements which by itself is a good means though nevertheless has to be on a sustainable basis. So, what are the factors that lead to sustained organisational performance over the years?

To understand the factors that propel organisations towards sustained performances over time, it would be worthwhile to look at the organisational framework borrowing from the classic McKinsey's 7-S model (See graphic).

The interplay and linkages as established by the model propound a multidimensional approach to organisation building. To me, it is a constant evaluation of the strengths of the `links' in the necklace rather than the gems per se. The focus many a time — driven by market compulsions, again — seems to weigh heavily on a few factors say, structure and staffing.Top management needs to invest time and resources to study the organisational framework from a 7-S perspective. This constant evaluation of the alignment of the 7-S elements leads to change management initiatives virtually on a continuous basis.

Let us examine two specific cases wherein one can see the success of a multi-pronged approach and also the failure of a unidimensional approach to 7-S.

Consider, for example, the case of a leading automobile ancillary organisation: Here was a company that was into the manufacture of power assisted steering gears which was in the nascent stage of its application in the country. A start-up operation, clearly, with a strategy of market development both in the export and domestic market. Cost advantage was the definite distinct competitive advantage . The strategy was to manufacture world-class products at globally competitive prices.

A structure that was lean, with fewer thinking minds at the top, backed only by a solid operational workforce was designed. The frontliners on the shop floor were school pass-outs and were trained by a leading engineering college of the time on workshop practices and shop floor skills. Here then, was a value added, highly committed and `loyal' workforce that was ready to deliver what the global customer wanted! Since the opportunity was that of a `do it right the first time', the culture also had to be consciously built for the first time.

Beginning with values and beliefs, the management articulated in clear terms the company's operating culture . No opportunity was lost in terms of `walking the culture talk' whether it was pertaining to the vendor, customer or the employee.

The focus was on an inclusive style of decision-making. State-of-the-art technology was introduced in terms of the manufacturing processes and great care was also taken to build `systems' in every aspect of the operation. For example, the process of training employees at various levels was documented in a manual detailing the objectives, syllabus, schedule and deliverables of the training system. As the professional leading the HR function in the company then, it was an exciting challenge not only for me, but also for all the colleagues who joined me in this team effort!

Today, it is a successful business venture and has grown in revenues, margins and markets. This is a classic case of how the McKinsey 7-S model could bring positive results when firing through all cylinders!

Viewed against this is the entry strategy of a multinational company in the confectionery space. It focused on all the elements of the 7-S model except getting the business strategy right. From recruiting and training a unique workforce to propagating shared values across the organisation and following a consensus-based decision making style, everything was turning out right internally. Even after the launch of the product across the country, months later, sales were not picking up to the levels of significant entry presence. Struggling as it was, the company was soon taken over by another confectionery major.

The lesson from here shows the importance of a focussed multi-pronged approach to the 7-S model without overly concentrating only on a few of the factors!

Going on from here, let's look at the larger context in which an organisation operates (See graphic). The organisation tends to be in a perpetual `change' mode. The greatest merit of this change process is one of developing organisational capability to evolve as a sustainable outfit, which is continuously facing pressure from the vicissitudes of market and environmental factors. The above model sequences the responses to the environmental and market factors.

In this millennium, the organisation that seeks to build capability for long-term sustenance along with short-term successes would be the ones that the investors are likely to turn to. It is in such companies that employees can actually build careers and not just take up an assignment. Can organisations stand up and make a statement?

(The writer is Head, HR and Administration, Cairn India)