Saturday, April 27, 2013

aThe McKinsey 7S Framework

aThe McKinsey 7S Framework

Ensuring That All Parts of Your Organization Work in Harmony

How do you go about analyzing how well your 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 7S 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, for example to help you:
  • Improve the performance of a company.
  • Examine the likely effects of future changes within a company.
  • Align departments and processes during a merger or acquisition.
  • Determine how best to implement a proposed strategy.
The McKinsey 7S model can be applied to elements of a team or a project as well. The alignment issues apply, regardless of how you decide to define the scope of the areas you study.
The Seven Elements
The McKinsey 7S model involves seven interdependent factors which are categorized as either "hard" or "soft" elements:
Hard Elements
Soft Elements
Shared Values

"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 other hand, can be more difficult to describe, and are 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.
The way the model is presented in Figure 1 below depicts the interdependency of the elements and indicates how a change in one affects all the others
Let's look at each of the elements specifically:
  • Strategy: the plan devised to maintain and build competitive advantage over the competition.
  • Structure: the way the organization is structured and who reports to whom.
  • Systems: the daily activities and procedures that staff members engage in to get the job done.
  • Shared Values: called "superordinate goals" when the model was first developed, these are the core values of the company that are evidenced in the corporate culture and the general work ethic.
  • Style: the style of leadership adopted.
  • Staff: the employees and their general capabilities.
  • Skills: the actual skills and competencies of the employees working for the company.
Placing Shared Values in the middle of the model emphasizes that these values are central to the development of all the other critical elements. The company's structure, strategy, systems, style, staff and skills all stem from why the organization was originally created, and what it stands for. The original vision of the company was formed from the values of the creators. As the values change, so do all the other elements.
How to Use the Model
Now you know what the model covers, how can you use it?
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.
You can use the 7S model to help analyze the current situation (Point A), a proposed future situation (Point B) and to identify gaps and inconsistencies between them. It's then a question of adjusting and tuning the elements of the 7S model to ensure that your organization works effectively and well once you reach the desired endpoint.
Sounds simple? Well, of course not: Changing your organization probably will not be simple at all! Whole books and methodologies are dedicated to analyzing organizational strategy, improving performance and managing change. The 7S model is a good framework to help you ask the right questions – but it won't give you all the answers. For that you'll need to bring together the right knowledge, skills and experience.
When it comes to asking the right questions, we've developed a Mind Tools checklist and a matrix to keep track of how the seven elements align with each other. Supplement these with your own questions, based on your organization's specific circumstances and accumulated wisdom.
7S Checklist Questions
Here are some of the questions that you'll need to explore to help you understand your situation in terms of the 7S framework. Use them to analyze your current (Point A) situation first, and then repeat the exercise for your proposed situation (Point B).
  • What is our strategy?
  • How do we intend to achieve our objectives?
  • How do we deal with competitive pressure?
  • How are changes in customer demands dealt with?
  • How is strategy adjusted for environmental issues?
  • How is the company/team divided?
  • What is the hierarchy?
  • How do the various departments coordinate activities?
  • How do the team members organize and align themselves?
  • Is decision making and controlling centralized or decentralized? Is this as it should be, given what we're doing?
  • Where are the lines of communication? Explicit and implicit?
  • What are the main systems that run the organization? Consider financial and HR systems as well as communications and document storage.
  • Where are the controls and how are they monitored and evaluated?
  • What internal rules and processes does the team use to keep on track?
Shared Values:
  • What are the core values?
  • What is the corporate/team culture?
  • How strong are the values?
  • What are the fundamental values that the company/team was built on?
  • How participative is the management/leadership style?
  • How effective is that leadership?
  • Do employees/team members tend to be competitive or cooperative?
  • Are there real teams functioning within the organization or are they just nominal groups?
  • What positions or specializations are represented within the team?
  • What positions need to be filled?
  • Are there gaps in required competencies?
  • What are the strongest skills represented within the company/team?
  • Are there any skills gaps?
  • What is the company/team known for doing well?
  • Do the current employees/team members have the ability to do the job?
  • How are skills monitored and assessed?

7S Matrix Questions
Using the information you have gathered, now examine where there are gaps and inconsistencies between elements. Remember you can use this to look at either your current or your desired organization.
Click here to download our McKinsey 7S Worksheet, which contains a matrix that you can use to check off alignment between each of the elements as you go through the following steps:
  • Start with your Shared Values: Are they consistent with your structure, strategy, and systems? If not, what needs to change?
  • Then look at the hard elements. How well does each one support the others? Identify where changes need to be made.
  • Next look at the other soft elements. Do they support the desired hard elements? Do they support one another? If not, what needs to change?
  • As you adjust and align the elements, you'll need to use an iterative (and often time consuming) process of making adjustments, and then re-analyzing how that impacts other elements and their alignment. The end result of better performance will be worth it.

The development of the Neo Relations Human approach was the most important evolution to the improvement of work design and management, movement from homo gregarious to homo actualis gave the industrial environment humanistic face to the modern structure of organisations. Neo- Human Relations Approach have been propelled and combined by the espousal of the principle of scientific management to create a sound managing and organizing of production systematic system that would create worker satisfaction and improvement of productivity. The Japanese approach represents the modern efficacy of work design and management, it emanated from the neo human relations approach in the bid to increase productivity. This essay will discuss and elucidate to what extent the Neo- Humans Relations Approach had an impact to the design and management of people according to the principles of scientific management with reference to the Japanese approach.

Neo Humans Relations Approach was the reaction to the harshness of the scientific management which alienated the social needs of the workers. Neo Humans Relations Approach was implemented in the bid to satisfy workers needs, self actualisation as factor that improves production. According to Thompson and McHugh (46:2002) Neo Human Relations was the reaction to the scientific management that of Taylorism that highly disregarded the human factor in the production processes. Before the efficacy of the Neo Human Relations approach the Fordism was the centre application to the management and design of the organisations. Fordism was the movement from assembly line and mass production which was characterised with specialized machinery, higher wages and low cost production, economies of scale, assembly line production, collective bargaining wage bargaining, real wages tied to production.Salman in Allen and Braham
In realisation of the failures of Taylorism of division of labour Fordism implemented production process that were all control over the aspects of production was exercised by management through hierarchical chain of authority. According to Allen and Braham (234:1992) Fordism was the introduction of machinery to eliminate labour and skills and let machinery to rest control from labour over the nature and pace of work. Fordism as a strategy to management and design of work was associated to intensive tight control over the process of production as well it failed to achieve a similar level of control over the workforce to an objectionable form of production. Allen and Braham (346:1992). This resulted in the rapid increase in the rate of turnover, growing absenteeism and broad dissatisfaction with work at the Ford plant and also led to the labour unrest on the shop flow that led to the introduction of the third element which was to give rise to the system of mass production namely the payment of high wages also Fordist system of mass production is held in capable of permanent innovation Allen and Braham (234:1992).

The unsatisfactory of the Fordism process of management of the people and work design led to various scholars propounding various experiments that tried to bring the humanistic picture at the fore front of the management and organizing production. In the mid 1920s, the research was carried out in the large Hawthorne plant employing 29000 workers making electrical appliances for Bell as a subsidiary of America Telegraphic and Telephone (AT&T) Thompson and McHugh (45:200). This was the beginning of Neo Human Relations as this experiment proofed that the workers’ surroundings are of critical importance to improve production process. Ford (81:1988) elaborates that the original purpose of the Hawthorne experiment was to test the scientific management ideas that the physical surroundings of the worker, the worker physical abilities and pay incentives all affect productivity.

The major contribution to the Hawthorne experiment is its contribution to addition of the humanistic sphere in the management of work and organization of production in which the improving of the condition of the environment is very critical to increase productivity. The Hawthorne experiment was based on varying the lighting for two test groups of women workers in the proposition to identify conditions affecting worker performance a group that had favourable conditions output rose in opposite to those were the conditions were not conducive for workers. Thompson and McHugh (45:200). By the end of the studies in 1932 the findings had led the researchers to conclude that the attention paid to the workers by management and researchers and the sociability developed among the worker in the experiment groups were human ‘social needs “ factors affected productivity . Workers that were happier found more work pleasant and produced more. Ford (81:1988)
The contribution of the experiment can be applied to the Japanese approach to managing and organizing production as the approach considers an environment were social needs are of importance job flexibility, multi-skilling and job rotation increases job participation and worker motivation which in turn are the major variance to increase the process of production. The significance of the of the Hawthorne does not lie in the results of the research nor its findings and methods for they are highly questionable (Garey 1967: Silver 1987) in Thompson and McHugh (45:200) But mostly reflects on the nature of the intervention itself combining psychologist, sociologists and anthropologists which resulted in the coutership between science and industry become something of a formal engagement Thompson and McHugh (45:200).The other result contribution of the results became the core of human relations theory and subsequently managerial practices.

The Neo Human Relations Approach provided to a greater extent the improvement over work design and management. The approach provided a holistic view of the ways to improve the production process if the humanistic goal is achieved in the industrial structures. The Hawthorne tests where accounted for by the formulation of the Neo-Human Relations Approach which according to Ford( 83:1988) came form the Renaissance view of workers being creative and needing an opportunity to develop, emphasize worker participation in decision making in varying degrees depending on the inclination of the theorists. Major focus was the personal adjustment of the individual within the work organization and the effects of group relationships and leadership styles.
The problems of alienation which led to the loss of control over the production process in the Fordism process which resulted in the workers sell their labour as commodity and all their commodity directed by the command of other people was now in the past as the Neo-Human Relations approach centred on the social needs of the workers for better management and increase in productivity. According to Grint (1998:123) Neo Human Relations represented an improvement in the work design and management structures self- actualisation courtesy of the was the new order but the day remained technocratically organized and the arguments retained the air of scientifically determined model rather than a sketch drawn around the interpretation of actions of humans.

The neo-human relations approach to the managing of the workplace was facilitated by McGregor who propounded the Theory X and Theory Y, Maslow of the hierarchy of needs and Herzberg of the motivation and hygiene factors these theories contributed to what is called Neo Humans Relations Approach. While the Japanese Approach also advocates for the humanistic view to the managing and organization just like the Neo Human Relations approach this modern approach of management can be strongly linked or emanated from the roots of the Neo- Human Relations approach. According to ILO (International Labour Organization) (1993:27) Japanese production system reveals its high dependence on human resources and hence its vulnerability to human variability.
Japanisation rests on the presumption that a competitive edge cannot be gained by treating workers like machines and that nobody in the manufacturing process, but the assembly worker, adds value, that the assembly worker can perform most functions better than specialists (lean manufacturing), and that every step of the fabrication process should be done perfectly (TQM), thus reducing the need for buffer stocks (JIT) and producing a higher quality end-product (Piore and Sabel, 1985). Scientific management was used by Japanese automobile constructors in the 1970s when they began to compete using “fundamentally improved manufacturing processes that consistently produced vehicles of higher quality far faster than Detroit” (Oakes p.569)
McGregor who propounded the Theory X and Theory Y according to McGregor in Grint (1998:124) Theory X involved the persons who disliked work, coercion was enforced to get tasks executed and advocates that people are preferred controlled than to have autonomy. Theory X works in the managing of the workplace lacked motivational factors or incentives which the Japanese approach provides to managing and organizing production the process of JIT (Just in Time) and TQM (Total Quality Management) also involves closing surveillance but workers are left to implement their knowledge of the means of production, element of feed back to the performance to the worker, training. That would enhance workers to be motivated without necessarily the use of coercion to get tasks executed Japanese approach allows greater autonomy to be given to the workers ILO (1993; 101) propounded that JIT and TQM is accompanied by the restructuring of occupations to reflect both flexible working and new training and promotion policies, JIT results in workers no longer operating a single function operatives but assuming a range of functions. The theory X worker in the Japanese approach is eradicated by these factors.

Although the Theory X argued by Maslow in the Maslow hierarchy of needs the motivational theory. Maslow (1954:80; 98) contends that human beings are motivated by hierarchy of needs when people’s lower needs are relatively satisfied by usually strive to fill a higher need. Maslow in Grint (1998:124) elaborates that hierarchy of needs existed with the physical needs at the base, moving through safety, love, esteem the approval by other people for one’s accomplishments, power and prestige finally self actualization the desire to become what one is potentially to become more and more what one is capable of becoming. However the main argument according to Grint (1998:124) is that this theory lack human needs and economic rewards resulted in low morale within the workplace. The Japanese approach has dealt with the matters of motivation according to ILO (1993; 29) led to human control as one of its technological feature, visible control of the production meant for workers to participate in the control by watching for visible signs of potential problems which in results in great autonomy and communication between the management and the shop floor worker. Motivation is enhanced when workers are given great autonomy as well as intrinsic rewards and monetary values and Japanese approach as a management system has included that in the way of managing and organizing production.
Theory X very much different form theory Y, as theory Y according to McGregor in Grint (1998:124) resolves the motivational and behavioral inadequacies in the workplace in which everyone likes work, coercion is not enforced, organizational goals as the main motivator and self actualization and lastly creativity is widely dispersed throughout the population. Grint (1998:124) elaborates that McGregor concludes that the management task is to develop strategies that will make them achieve organizational goals.

The Japanese approach implements the theory X as it resolves the motivational and behavioral inadequacies in the workplace according to ILO (1993:29) it implements the self management of the work place were workers have high degree of responsibility for controlling the work process, particularly for specifying and modifying methods and procedures at their work stations, self inspection production workers were responsible to inspect what they produce, rewards in the Japanese approach are given bonuses, regular pay, promotions which of essential motivational value. The Japanisation process led greater participation as information sharing sessions among various groups of employees increased, creating an informal organizations that improved interaction of workers the creation of the “social man” due to the Neo- Human Relations Approach implementation in the managing and organization of production hence resulted in the motivated workforce.
The Herzberg Theory that is centered on the Hygiene factors and the Motivational factors. According to Herzberg in Grint (1998:125) the Hygiene factors stated that material reward and security are negative motivators but there absences affect productivity so their presence is precondition for higher productivity. The Japanese approach is compelled with material rewards and job security that in turn increases worker moral in the organization. The shift from machine operators to well skilled technicians improved worker security in the workplace according to Thompson and McHugh (157:200) temporary workers and intense work pace can cause low morale and drop outs. Job security in the Japanese approach led to the creation of a work force that has a strong bond with the organization policies and behaviour. The Japanese approach implementation of multi-skilling and flexible working are those factors if removed from work design can reduce the productivity of organisation.
Absence of the Hygiene factors can be solved by the imposition of the Motivational factors according to Grint (1998:124) the motivational factors must symbolic and psychological rather that material in nature must involve status, advancement and intrinsic job interests. The Japanese approach implements various motivational factors to the management and organizing production according to ILO (1993:126) in Japanisation the concept of innovation was not of elite activity but the work improvements performed by all employees, working collectively ,working from bottom up , rather than to down. This bureaucratic configuration can act as a motivator. Mostly the individuals in the Japanisation process individual accomplishment are recognized by the management applauded through promotion, financial rewards and performance appraisal.

The development of the Neo-Human Relations Approach changed and improved work design and management, the scientific management system that analyzed the workflows within the proposition to increase productivity was further improved by the improvement of the Neo Human Relation Approach. The Japanisation process of managing and organizing production was developed from the efficacy of the Neo- Human Relations Approach as it laid the foundation to the organizational structure and work design in the Japanese factories in the modern era

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Thompson, P & McHugh, D 2002. Work Organisations. A Critical Introduction, 3rd edition, Basingstoke, Palgrave

Oakes, L.S. Miranti, P.J. (1996) Louis D. Brandeis and standard cost accounting: A study of the construction of historical agency. Accounting Organizations & Society. 21, 569-586