4.1 THE MCKINSEY 7S FRAMEWORK

The McKinsey 7Ss model is one that can be applied to almost any

organizational or team effectiveness issue. This model is a tool for managerial

analysis and action that provides a structure with which to consider a company as a

whole, so that the organization’s problems may be diagnosed and a strategy may

be developed and implemented.

How do we go about analyzing how well an organization is positioned to

achieve its intended objective? This is a question that has been asked for many

years, and there are many different answers. Some approaches look at internal

factors, others look at external ones, some combine these perspectives, and others

look for congruence between various aspects of the organization being studied.

Ultimately, the issue comes down to which factors to study.

While some models of organizational effectiveness go in and out of fashion,

one that has persisted is the McKinsey 75 framework. Developed in the early

1980s by Tom Peters and Robert Waterman, two consultants working at the

McKinsey & Company consulting firm, the basic premise of the model is that

there are seven internal aspects of an organization that need to be aligned if it is to

be successful.

The 7S model can be used in a wide variety of situations where an alignment

perspective is useful to:

1) Improve the performance of a company

2) Examine the likely effects of future changes within a company;

3) Align departments and processes during a merger or acquisition; or

4) Determine how best to implement a proposed strategy.

The model is based on the theory that, for an organization to perform well, these

seven elements need to be aligned and mutually reinforcing. So, the model can be

used to help identify what needs to be realigned to improve performance, or to

maintain alignment (and performance) during other types of change.

Whatever the type of change - restructuring, new processes, organizational merger,

new systems, change of leadership, and so on - the model can be used to

understand how the organizational elements are interrelated, and so ensure that the

wider impact of changes made in one area is taken into consideration.

THE SEVEN ELEMENTS

The McKinsey 7S model involves seven interdependent factors, which are

categorized as either “hard” or “soft” elements:

fig no7:seven s model

“Hard” elements are easier to define or identify and management can directly

influence them: These are strategy statements; organization charts and reporting

lines; and formal processes and IT systems.

“Soft” elements, on the hand, can be more difficult to describe, and less

tangible and more influenced by culture. However, these soft elements are as

important as the hard elements if the organization is going to be successful.

Placing Shared Values in the middle of the model emphasizes that these

values are central to the development of the other critical elements.

Table6: Hard and Soft elements

All 7Ss are interrelated, so a change in one has a ripple effect on all the others. It is

impossible to make progress on one without making progress on all. Thus to

improve your organization, you have to master systems thinking and pay attention

to all of the seven elements at the same time.

There is no starting point or implied hierarchy – different factor may

drive the business in any one organization.

Hard Elements Soft Elements

Strategy

Structure

Systems

Shared Values

Skills

Style

Staff

Shared Values

Shared values are commonly held beliefs, mindsets, and assumptions that

shape how an organization behaves- its corporate culture. Shared values are what

engender trust. They are an interconnecting center of the 7Ss model. Values are the

identity by which a company is known throughout its business areas, what the

organization stands for and what it believes in, it central beliefs and attitudes.

These values must be explicitly stated as both corporate objectives and individual

values.

Structure

Structure is the organization chart and associated information that shows

that reports to whom and tasks are both divided up and integrated. In other words,

structures describe the hierarchy of authority and accountability centralized,

functional divisions (top-down); decentralized (the trend in larger organizations);

matrix, network, holding, etc. These relationships are frequently diagrammed in

organization charts. Most organization use some mix of structures – pyramidal,

matrix or networking ones – to accomplish their goals.

Strategy

Strategies are plans an organization formulates to reach identified goals,

and a set decisions and action aimed at gaining a sustainable advantage over the

competition.

Systems

Systems define the flow of activities involved in the daily operation of

business, including its core processes and its support systems.

They refer to the procedures, processes and routines that are used to manage the

organization and characterize how important is to be done. Systems include:

Business system

Business Process Management System (BPMS)

Management information system

Innovation system

Performance management system

Financial system/capital allocation system

Compensation system/ reward system

Customer satisfaction monitoring system

Style

“Style” refers to the cultural style of the organization, how key managers

behave in achieving the organization’s goals, how managers collectively spend

their time attention, and how they use symbolic behavior. How management acts

more important that what management says.

Staff

“Staff” refers to the number and types of personnel within the

organization and how companies employees and shape basic values.

Skills

“Skills” refer to the dominant distinctive capabilities and competencies of

the personnel or of the organization as a whole.

Relation to Company

STYLE

Here style, means that company employees share a common way of

thinking and behaving. Also it refers to the style of leadership of the management.

The style of management at KS&DL is participating style.

It believes that with the participation and involvement of all the company’s

objectives can be successfully met.

The employees participate through suggestion scheme policy and provide

their valuable.

STRATEGY

The concept of strategy purpose, vision, objectives, goals and major action

plans and policies. A strategy reflects a company’s awareness of how, when and

where it should compete, against it should compete, and for what purpose it should

compete.

SHARED VALUE

Shared values refer to set values and aspiration that go beyond the

conventional formal statement of corporate objectives. Their goals are the

fundamental ideas around which a business is built. They are main values culture

of an organization is usually determined by the sum of the values, benefits and

working practices that exist within organizational operational standards.

SYSTEM

By system we mean that all procedures, formal and informal, that make the

organization go, today by day and year by year. Capital budgeting system, training

system, cost accounting procedures budgeting system. If there is a variable in our

model that threatens to dominate the other, if could well be system do you want to

understand how an organization really does get things done? Look at the system

want to change an organization without disruptive restructurings? Try to change

the system.

If a manufacturing or production company is trying to come up with an over

all corporate strategy. Textbook portfolio theory seemed to apply: find a good way

to segment the business, decide which segment in the total business portfolio is

most attractive, and most heavily in those. The only catch: reliable cost data by

segment where not to be had. The company’s management information system was

not adequate to support segmentation.

Electronic Data Processing System

There is an electronic data processing system which stores all kind of

information which is required by the organization in doing its

business .Information regarding customers’ information regarding production,

information regarding payment done by the customers, information regarding

performance of the organization, financial information regarding its employees etc.

Human Resource Information System

There is an HR package which stores all employee profile such as employee

ID, code number, joining date, place of posting, name, personal profile,

designation, experience, pay scale and history.

On the basis of this data rating is done. It also gives information of overall

employee structure like number of persons joined in a month, transfer, promoted,

loan taken category, etc.