- 37 - MUC-0140-97097-02-6a Organisational redesign of service centers The alternative concepts generate different types of business and rules for service centers Types Objec- tives Risks Suitable for … Competence/ service center central administration Competence/ service center in product company Spin-off (Service GmbH) Outsourcing of service make or buy HQ HQ HQ • Control • Realisation of synergies • Success factors critical to management • Neutrality • Decentralisation • Cost allocation according to the principle of causation • Decentralisation • Entrepreneurship • Focus on core business/ functions • Focus on core business/ functions • Flexibility • Cost transparency • Self-sufficiency • Cost increase • Non-business-orien- ted decisions • Mix of management and service • Loss of neutrality • Short-term cost/performance optimisation • Too much strain/loss of motivation • Neglect of group interests • Know-how drain • Higher transaction costs • Cost control • Irreversible dependencies • Know-how drain • Reduction of internal capacities • Control/system functions • Functions predominantly used by one business field • Non-critical handling functions • Functions using the specific know-how of one business field • Locational functions • Functions with potential to increase efficiency • Guarantee protection of know- how • Marketable functions/services • Functions with large fluctuations of capacity utilisation • No specific group know-how • Functions with clearly defined service volumes HQ Source: Roland Berger & Partner
Transcript
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Organisational redesign of service centers
The alternative concepts generate different types of business and rules for service centers
Types
Objec-tives
Risks
Suitablefor …
Competence/service center
central administration
Competence/service center inproduct company
Spin-off(Service GmbH)
Outsourcing of servicemake or buy
HQ HQ HQ
• Control• Realisation of synergies• Success factors critical to management• Neutrality
• Decentralisation• Cost allocation according to the principle of causation
• Decentralisation• Entrepreneurship • Focus on core business/ functions
• Focus on core business/ functions• Flexibility• Cost transparency
• Self-sufficiency• Cost increase• Non-business-orien- ted decisions • Mix of management and service
• Loss of neutrality• Short-term cost/performance optimisation
• Too much strain/loss of motivation• Neglect of group interests• Know-how drain
• Functions predominantly used by one business field• Non-critical handling functions• Functions using the specific know-how of one business field• Locational functions
• Functions with potential to increase efficiency• Guarantee protection of know- how• Marketable functions/services
• Functions with large fluctuations of capacity utilisation• No specific group know-how• Functions with clearly defined service volumes
HQ
Source: Roland Berger & Partner
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Allocation of optional central functions
Allocation alternative Sample companies Reallocated functions
• Hardware and software• Auditing• Licensed sales/handling• Personnel management• Central research• Insurances• Training and seminars• Real estate/housing• Forwarding/dispatch• Travel agency
Competence/service center
in business field
HQ
• MBB• VOEST Alpine• Hoesch• Dornier• Freudenberg• AEG
Div. Focus on • Org/DP• Accounting functions• Consulting• Locational services
Outsourcing ofservice
HQ
In practice, there are typical, time-honoured concepts for the organisational redesign of service functions
Source: Roland Berger & Partner
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1.5 Service center
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The holding company's typical core functions are the result of the type of management pursued
Financialmanagement
Operativemanagement
• Operative controlling/budgeting• Central administrative functions/systems• Coordination of product development/centralised functions• Coordination of distribution/central functions
Management functionsrequired
Staffdimensioning
Type ofmanagement
Increasingnumber offunctions
Strategicmanagement
Typical core functions of a holding company
• Group strategy/ROI participation portfolio• Allocation of resources, finance• Financial management/treasuring• Participation management (reporting)• Investment guidance/monitoring/strategic planning
• Strategic group planning/controlling• Programme planning• Participation planning/M+A projects• Synergy management via committees and central functions• Target coordination of operative plans • Basic issues regarding personnel/management development• Central services/facilities, if applicable
Staffing ofcentral
administration
Source: Roland Berger & Partner
Example
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Entrepreneurial vision and objective
Determinants and characteristics of the holding company's organisation
Type of management pursued by partners
Type of holding
• Financial
• Strategic
• Operative
Functions
• Core functions
• Optional functions
• Service functions
Staffdimensioning
Management conceptand
managementsituation
Managementsystem
and verticalcollaboration
Business/participation portfolioStrategic and operative management
demand
The type of management pursued thus forms the basis for the detailed design of the holding company
Source: Roland Berger & Partner
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The management focus can lead to three specific types of holding companies regarding management objectives and central functions
Typicalcentral
functions
Managementobjectives
• Maximum return on equity - no matter in which business• Dividend/return on capital• High company values
• Strategic optimisation of resource utilisation• Management of synergies• Management of "white spots"• Industrial management company
• Strategic and operative result optimisation using all business fields• Operative control/optimisation of business fields/functions• Market shares, ROI, growth
• Finance/Treasuring• Legal/tax• Group accounting• Participation management
• Finance• Group controlling• Strategic planning• Executive development• Distribution/sales coordination• Group marketing• Group servicesOptional:• Central research• Group distribution
• Management staffe. g.• Finance/accounting• Central distribution• Central development• Works organisation
Decentralisation and establishment of management holding companies are the general organisational trends for group organisations
General strategic/organisational trends
Increasing significance of takeovers, mergers and strategic alliances within the framework of internationaldivision of labour and globalisation
Rediscovery of small, flexible, decentralised business units with own entrepreneurship to deconcentrate large companies and utilisation of business potentials
Decentralisation of DP into functions and flexible structure-independent management/communication systems
"From hierarchy to expertocraty" as structural characteristic of large companies, i. e. flat structures and new management requirements
• Necessary business orientation of organisation by way of business field segmentation
• Decentral management and organisational concepts under a minimum of superior structures (as a framework for values, vision and synergies)
• Often extreme re-thinking in the companies due to loss of core business dominance in structures, qualification and culture
Managementholding
organisation
Source: Roland Berger & Partner
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1.4 Holding concept
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• Personification of inte- gration is necessary• Multipliers must come from both companies/ become firmly anchored in the other one
Initiator
• Start of communication process with six core issues
Contents
• Most important target group during 1st phase are executives • Executives need to commu- nicate/support integration top-down • Information of responsible executives at Ruther group
Target group
• Focus on existing media• Supplemented by ad hoc transition media later to be integrated into the overall concept
Media
• Reduction of individual interpretations/insecuri- ties• Speeding up top- down information
Effect
Who says what to whom using which media pursuingwhich
goal?
1. Historical development from point zero to present2. Strategy3. Process of integration4. Intercultural collaboration5. Structure/organisation6. Results of transition teams
• CEO of both companies• Executives from both companies
Total number of contacts(Nov./Dec. 94)
20.253(Executives + staff)
• XY actual• AB today• Company newsletter of integrated company• Management summaries• Segment-internal jour fixe
• Achievement of common base of information
Activities during the start phase
The project phases' individual parameters of communication are designed in great detail
Example PMI
Source: Roland Berger & Partner
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A requirement for successful communication during a PMI-Project is a comparable level of information of all those involved
Start:Communication of decision-making process
Turning point:
Objective:Communication of integration/success and focus on business process/day-to-day business
Phase
Communication of progress/success/decisions in the integration process
1.
2.
3.
Process
Communication
Objective
• Creation of a common basis of information
• First step towards common convictions/opinions• Modification/adjustment of communication
• Anchoring and acceptance of common values, standards and objectives
Tools
Media, e. g.• xy actual• Company newsletter
To be supplemented by:• Personal communication (e. g. social contacts)• Feedback (e. g. survey, workshops)• Management tools (e. g. training/ preparation for rotation)
Closed concept• Top-down• Bottom-up
Information
Information
Feedback
Sender Recei-ver
Communication conceptExample PMI
Source: Roland Berger & Partner
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1.3 Communication concept (KK)
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The results of the cultural audit cover the major factors of corporate management
• Strategic success factors
• Characteristics of the company
• Structure
• Working methods
• Staff/executive qualification
• Incentive systems
• Motivation
• Personnel management
• Career development
• Information/communication
• Management style
• Working atmosphere
• Flexibility/readiness to change
• Innovation orientation
• Behaviour towards staff/trust
• Work processes
• Decision-making processes
• Openness/transparency/
communication competence
• Entrepreneurship
• Internationalisation
Resultareas
Questionnaire
relating toindividualquestions
relating to severalquestions
• –––––––––––• –––––––––––• –––––––––––
Source: Roland Berger & Partner
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The cultural audit is performed in three steps using standardised tools
Pilot phase
• Approx. five to ten interviews/explo-
rations with executives and participants in
the project to determine focus issues
• Adjustment of standardised questionnaire by
integrating the company's specific situation
• Coordination of questionnaire action
• Design of sample/selection of target persons
Collection phase
• Mailing of questionnaires to executives/
staff (incl. explanation of objectives and
procedure)
• Monitoring of questionnaire-return and
evaluation of responses
• Interpretation of responses
• Development of recommendations for
action/measures
Communication of results
• Presentation (Board/executives)
• Management workshops
– Detailed discussion of results
– Expansion/coordination of recommen-
dations for action
• Internal communication in the company
1 2 3
Steps of cultural audit-approach
Source: Roland Berger & Partner
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The cultural audit identifies weaknesses in the collaboration between a company's staff and its executives
Cultural audit
• Identification of disruptive factors
• Weighted evaluation of identified disruptive factors
• Workshops with executives – Guarantee/expansion analysis – Conceptualisation of target culture
Tools
Source: Roland Berger & Partner
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1.2 Cultural audit (CA)
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The critical project phase is the deduction of organisational consequences from business system and strategy
Source: Roland Berger & Partner
• Concept development
• Workshop
• Presentation
Development ofdesign conceptsand alternatives
• Management concept/structure
• Organisational structure
Detailed design oftarget organisation
incl. actual/target transition models
Strategy audit
• Identification of strategic position, opportunities/risks, orientation and strategies
• Business field segmentation incl. business system and success factors
• Deduction of strategic and organisational requirements for management, structure and systems
• Expert interviews (internal)
• Secondary data
• Workshops
Pilot interviewsFamiliarisation with business, problem structure and focuses of the survey
• Top management/ shareholder interviews
Step 4
Step 5
Step 2
Step 1
Step 3Organisational
assessment
• Actual organisation and distribution of functions
• Strengths and weaknesses
• Company image and management concept
• Executive discussions (1st - 3rd level)
• Secondary data
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SBO: From business system to strategy-oriented group structure
Source: Roland Berger & Partner
Functional, divisional
servicerelations
Managementconcept
Actual
Businessposition/strategies
Actualtarget
Corporateorganisation/
culture
Actual
Model/targets/visionof partners
and top management
Controlledmanagement
conceptcentral/decentral
Businessfield
identifi-cation
Businessaffinities/synergies
Businessfield
strategies
Businesssystem/successfactors
Manage-ment
system/potential
Strengths/weak-
nesses
Strategic evaluation of functions• Core functions for the management of a business field• Optional functions• Superior control functions
Formation of busi-ness units • Bundling of core
function into manage- ment areas (business
units) • Formation of cen-
tralised functions and service areas
• Organisational structures
Detailed design of target organisation• Management struc- ture of business units• Management structure of superior control/ synergy utilisation• Horizontal and vertical management system• Management requirements
Manage-ment
require-ments
Analysis
Management
require-ment
Corporateculture
Deduction Design
SBO-approach
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Strategy-based Organisation: How to establish business-oriented organisational structures
Optionalfunctions
Market
Business activities
Businessneeds Core functions
Deduction ofstrategic business
needs
Identification ofcore functions
Creation ofbusiness units
Design of overallmanagement
structure
Adjustment ofmanagement
systems
Segmentation ofbusinessactivities
Management
Advisoryboards
Centralfunctions
Commit-tees
Service-Center
Businessunits
Optionalfunctions
Line functions?
Service functions?
Make or buy?
Subsi-diaries
Internal structure
Source: Roland Berger & Partner
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1.1 Strategy-based organisation (SBO)
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Examples of existing consulting programs
1. Strategy-based organisation (SBO)
2. Cultural audit (CA)
3. Communication concept (KK)
4. Holding concept
5. Service center
Source: Roland Berger & Partner
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1. Classical issues and tools of CC Organisation
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Newly developed or currently being developed
Consulting programs, tools and new concepts of CC Organisation – an overview
Products/programs Instruments/tools Industry know-howMarketing tools(Issue papers)
Basic studies/organisational concepts
• Benefit for public image/ competence references
• Project modules • Accessibility/ up-to-dateness
• Marketability
• Standardisation (manual)
• Internal training module • Marketing/acquisition base • Innovation for new programmes
• Marketability• Defined client benefit
• Science/practice links
• Internal training
• Basic expertise/know-how• Value for publication• Standard approach • Documentation
(AA)EDP-supported process analyses: Supplement process cost analysis
(SGS)Strategic reduction of overhead/structural adjustment
(FKD)Functional ratios file
(HDD)Holding benchmarking/documentation
(PA)Personnel structure analysis
(ÖHD)Public sector documentation
(CA)Cultural audit
Management systems: Adjustment to divisional requirements
(KA)Cost structure analysis (BRD)Organisational documentation by industry
(CCP)Cultural change programme
Lean management/Business reengineering
(KK)Communication concept
(FA)EDP-supported function analysis
(OGK)Operative reduction of overhead
Study on European management culture
Holding conceptsFamily-owned businesses
(PAD)Personnel structures file
(SBO)Strategy-basedorganisation
(PMI)Post Merger Integration
• CC Marketing
Model for transnational company managementincl. practical examples
(TUF)
Virtual corporation concept
(RL)Implementation guidelines
Networking
Source: Roland Berger & Partner
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B. Tools and concepts of CC Organisation
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The WDR example shows that interactive projects are more costly, but can achieve better results
Source: Roland Berger & Partner
9 3
6
12Time
Cost2$
5$
2$5$1$5$
QualityErrors
t
Results
• Reduction of processing times by up to 80 %, e. g. fee calculation and remuneration of freelancers from three weeks to three days
• A minimum of DM 18 million direct cost reduction
• Establishment of internal customer/supplier relations reduces error rates and increases customer satisfaction
Example
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This approach counts on a continuously increasing employee participation in the course of the project
Active and passive participation of employees in the change process
10%
100%
Anchoring, contin-uous improvement
DisseminationPilotimplementation
Actual analysis,target forecast
Kick-off
Communication andoff-and-on
participationWork in the
changedorganisation
Process/project teams
Employees
Source: Roland Berger & Partner
Example
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The pilot implementation forms an integral part of the interactive bottom-up project work at WDR
Selection of process
Actual analysis
Concept and measures
Pilot implementation
DisseminationAnchoring
• Workshops
• Individual tasks
• Basis teams
• Cooperation with
divisions concerned
T C Q
• Pilot region• Set targets• Training• …
Source: Roland Berger & Partner
Steps of project work at WDRExample
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Top-down approach
Objectives definedby the Board
Desk research/benchmarks
Interviews at manager level
Target concept(discussion)
Implementation
Consultant as expert,little interaction
Source: Roland Berger & Partner
Steps of project work at Deutz Motor GmbHExample
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The decision for a consulting approach depends on the objectives pursued
Consultingapproach
RB&Pconsultingprograms
Clientobjectives
Company development
Bottom-up
Starting with the employee
Restructuring
Top-down
Starting with the business system
Source: Roland Berger & Partner
Alternative consulting approaches
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2. What is the proceeding in organisational projects?
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Fields of application for organisational consulting
• Horizontal and vertical structuring• Functional and object orientation• Centralised – decentralised• Staff line
Structures
• Division of labour – integration of functions• One piece flow• Coordinative mechanisms
Processes and cooperation
• Operative and strategic controlling• Management systems, forums• Incentive systems
Systems
• Thinking in terms of divisions• Value added/customer orientation• Exchange of information
Culture
Management
Source: Roland Berger & Partner
Five fields of potential change have to be worked on
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The main objective of organisational consulting is to improve efficiency and effectiveness of an organisation
External factors
Internal factors
Time, cost and qualityas competitive factors
Activities in the world market Technological progress
Product/market diversity Complex structures Size
• Reduced product life cycles and market cycles• Delivery time and flexibility of delivery
Determinants and objectives of organisational consulting
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International organisational structures – an overview
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1. What is organisational consulting?
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A. Object and approach of CC Organisation
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A. Object and approach of Organisation 41. What is organisational consulting? 52. What is the proceeding in organisational projects? 9
B. Tools and concepts of CC Organisation 151. Classical issues and tools of CC Organisation 172. New consulting programs 38
C. Structure and tasks of CC Organisation 44
Index Page
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Roland Berger & Partner GmbH – International Management Consultants
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Start-up Seminar
– Organisation –
Roland Berger & Partner GmbHInternational Management Consultants
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