Currently viewing the tag: "operational excellence"

SCMMajority of pharmaceutical companies are persisting with decade old processes and routines.  They have transactional relationships with suppliers, lack of concerted efforts to progress ahead, and no vision to reap productivity rewards.  The reasons for continuing with these traditional practices include tax regimes, regulatory hurdles, and stable revenues from customers dependent on existing industry offerings.

Disruption—spurred by technological Innovation, fluctuating customer demand patterns, and more agile and creative competitors—has forced the pharmaceutical sector to think of ways to face these challenges, survive, and thrive.  One of the strategic response to this competitive disruption—by leading manufacturers—is to reexamine their manufacturing operations, embracing agile principles, reducing costs, revolutionizing procurement and distribution functions, and striving to achieve Operational Excellence.  Above all, they view their supply chain not as a cost center, but as a source of Competitive Advantage.

The increasing influence of generic drugs is another challenge for large multinational pharmaceuticals.  In the past, multinational companies (MNCs) dominated the market owing to possessing a number of high-market drugs protected under patents.  Patent protection afforded them the leverage to set high prices on each product.  The scenario is fast changing.  Expiry of high-market drugs patents is creating a huge opening for generic competitors and the space is widening compared to the past.

In the past, pharma manufacturers were able to counter the threat to generic competitors by developing new drugs.  However, this is becoming difficult and the new drugs pipeline is shrinking with time.  R&D expenditure has continuously gone up, however, drug approval from the authorities has not kept paced with it.  It has rather declined, straining the MNCs further.

Other disruptive factors include newer distribution methods, public health plans favoring generic drugs over proprietary ones due to cost effectiveness, the newer internet / mail delivery options displacing traditional pharmacy dispensing options.  Pharmacy chains—e.g. Walgreens—have given a leverage to the retailers to negotiate reduction in medicine prices where again generics have an edge over MNCs.

Moreover, the trend of drugs purchased through a formal tender process is increasingly gaining acceptance, adding to the difficulties of large pharma manufacturers.  Additionally, strict regulations are minimizing the cost benefits that MNCs traditionally enjoyed in the past.

All these factors have forced the pharma companies to reorganize their Supply Chains in a more flexible manner to manage complexities, bring in efficiency, and contain costs to compete in off-patent segment with generics.

Reorganization of a conventional pharmaceutical Supply Chain into an Agile, flexible, and inexpensive Supply Chain warrants developing Operational Excellence and Cost Reduction competencies.  This necessitates 5 strategic steps (phases):

  1. Avoid a one-size-fits-all approach to SCM
  2. Develop Agile product design and packaging capabilities
  3. Restructure the Supply Chain footprint
  4. Establish partnerships with 3rd party suppliers
  5. Enhance planning capabilities

Let’s discuss these steps in detail.

Step 1 – Avoid a One-size-fits-all Approach to SCM

Large pharma MNCs typically maintain the Supply Chain of all of their drugs with a single strategy of retaining high inventory and service levels.  Such a strategy can only work for products having a high profit margin, in a static environment.  It is not suitable for low-margin products, contrasting environments, and does not take into account fluctuations in demand patterns.  An appropriate approach is to implement a multiple Supply Chains model based on individual products and markets.

Step 2 – Develop Agile Product Design and Packaging Capabilities

The 2nd step in Pharma Supply Chain Reinvention involves quick distribution of different versions of products to markets based on demand. For low-margin products with high demand volatility, the Supply Chain Management Strategy should be to employ Pack-to-Order system.  The Pack-to-Order approach involves developing a version of a product that could be timely dispatched to several markets of varying demand across the globe.  This approach coupled with Postponement Strategy—where products are packed to order during later stages of production based on regional demand—assists in trimming down the inventory, reducing complicatedness, and enhancing Supply Chain nimbleness to demand volatility.

Interested in learning more about how to reinvent your Pharmaceutical Supply Chain?  You can download an editable PowerPoint on Pharmaceutical Supply Chain Reinvention here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

9595419074?profile=RESIZE_400xBusiness and technology resources are aligned using Enterprise Architecture (EA) in order to achieve strategic results, improve organizational performance, achieve Cost Optimization and Operational Excellence, and guide departments to fulfill their central missions more efficaciously.

Federal Enterprise Architecture Framework (FEAF) does that for any U.S. federal agency and helps systems transcend interagency boundaries.

Planning is one of the most important elements for bringing about change in an organization, if not the most important.  Planning methodology for the Federal Enterprise Architecture Framework is called Collaborative Planning Methodology (CPM).

Collaborative Planning Methodology is the next-generation successor to Federal Segment Architecture Methodology (FSAM).

Collaborative Planning Methodology encompasses 2 phases and a total of 5 steps under these phases:

Organize and Plan phase lets planners facilitate partnership between sponsors and various stakeholders in order to ascertain and prioritize requirements, explore other organizations with same needs, and devise plans to tackle the stated requirements.

Implement and Measure phase has the planners in assist role to other key personnel working to implement and monitor change related activities by supporting investment, procurement, implementation, and performance measurement actions and decisions.

Each step under these 2 phases has a number of activities that need to be completed in order to obtain the outcome for that step.  There are regular and essential iterations within and among the phases even though the phases have been displayed as successive.  Let’s discuss the key steps of the methodology in detail.

1. Identify and Validate

The objective of the 1st step is to ascertain what is required to be attained, comprehend the main drivers for change, and afterwards delineate and prioritize the goals with stakeholders and operational staff.

Key outcomes of the step include:

  • Identified and validated needs.
  • Overarching set of performance metrics.
  • Determination of who (governance) will ultimately oversee and approve recommended changes to meet those needs.

2. Research and Leverage

The aim of this step is to detect organizations and service providers who have already fulfilled or presently have requirements similar to those identified in Step 1.  This necessitates studying their experiences and outcomes in order to discover if they can be used and leveraged or whether an alliance can be created to fulfill the needs together.

Key outcomes of the step include:

  • Clear grasp on the experiences and results of other organizations.
  • Determination by sponsors regarding applicability, usage of experiences of other organizations or formation of partnerships if the other organization is also planning to fulfill similar needs.
  • Detailed analysis of alternatives.

3. Define and Plan

The purpose here is to form the integrated plan for the alterations essential to fulfill the requirements determined in Step 1.

Key outcomes of the step include:

  • Sponsor and stakeholders hold an integrated set of plans and articles outlining what is to be done, when is it to be done, what benefits will be achieved and when, and a projected cost.

4. Invest and Execute

Point of this step is to carry out investment decision and effect the changes as delineated in the Integrated Plan produced in Step 3.

Key outcomes of this step include:

  • Clear funding strategy and a decision to approve the investment of required funds.
  • Implementation of recommendations for tackling the identified needs.

5. Perform and Measure

Objective of this step is to execute operations and measure performance outcomes against established metrics.  The recently applied changes are leveraged by the organization in Performance Management.

Key outcomes of this step include:

  • Performance outcomes gauged against pre-determined metrics.
  • Production of significant outcomes e.g., feedback into planning with the view to making more adjustments in addition to what was implemented in Step 4.

Interested in learning more Collaborative Planning Methodology, its salient features, and the key activities in each step?  You can download an editable PowerPoint on Collaborative Planning Methodology here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

9316883094?profile=RESIZE_400xEnterprise Architecture (EA) conveys management best practices for positioning business and technology resources to fulfil strategic goals, enhance Organizational Performance, and guide departments to achieve their core missions more successfully via Operational Excellence.

The Federal Enterprise Architecture Framework (FEAF) realizes this goal for U.S. Federal agencies and assists systems surpass interagency boundaries.  FEAF facilitates through documentation and information, and conveys a summarized outlook of an enterprise at various tiers of scope and detail.

The FEAF comprises of 6 interconnected Reference Models, linked through Consolidated Reference Model (CRM), each relating to a sub-architectural domain of the FEA framework.

Data Reference Model (DRM) is a FEA tool for ascertaining the data that the Federal government has and the process through which that data will be shared when business/mission requirements occur.

DRM is propounded as a theoretical framework from which actual implementations may be derived.

DRM offers a uniform way to describe, categorize, manage, share, and reuse data/information within and across the Federal government.  DRM also enables detection and communication of core information across organizational boundaries.

What DRM is not is static and invariable nor is it a data management manual for how to build and maintain data architectures.  It is neither a pan-government conceptual data model nor an all-embracing / fully attributed logical data model.  DRM is not supposed to be a comprehensive collection of XML schemas or a substitute of prevailing data structures within the agencies.

DRM works in consonance with other reference models in various ways.  For example, it identifies opportunities for strategic coordination through relationships among data sources by linking with Performance Reference Model (PRM) while improving business processes and decision-making performance through data sharing with Business Reference Model (BRM).

Data Reference Model arrangement is demarcated by a 3 layered hierarchy.  The 3-layer arrangement of the Data Reference Model delineates domains, subjects, and topics.

  • Domains – Uppermost level of the hierarchy comprises of 4 Domains.
  • Subjects – Central level of the hierarchy covers 22 Subject elements.
  • Topics – Lowermost level of the hierarchy consists of 144 Topic elements.

DRM refers to data and information required to execute Federal business and mission functions.  In order to assist agencies in consistently categorizing, describing, and exchanging their data, there are 3 fundamental method areas associated with the DRM:

  1. Data Description
  2. Data Context
  3. Data Sharing

 

Let us delve a little deeper into the DRM methods.

Data Description

Data Description offers an approach to consistently arrange, portray, and share data.  Customarily, Data Description was exclusively concentrated on arranging and describing structured data.  To tackle the challenge of unstructured data, DRM Data Description section was revised to focus on Metadata.

Metadata is broadly classified into 2 types, business or technical.

Data Context

Data Context is any information that gives added sense to data and a perception of the reason for which it was created.  Data Context permits Data Governance and forms the basis for exhaustive Data Description.  Data categorization methods such as Data Asset Catalog and Information Discovery and Search portray common data architecture artifacts.

Data Sharing

Data Sharing concentrates on architectural patterns for sharing and exchanging data.  Data Sharing assists in retrieving and swapping of data, where access involves supplementary requests and exchange involves permanent, repeating transactions between interest groups.

Interested in learning more about the Data Reference Model?  You can download an editable PowerPoint on FEAF: Data Reference Model (DRM) here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

8589000693?profile=RESIZE_400xStrategy is about the methods used to attain goals.  It’s the “how” of achieving goals—desired future conditions and circumstances towards which effort and resources are spent until their achievement.

If Strategy has any meaning at all, it is in relation to some aim or end in view.

Strategy is 1 of the 4 dimensions of an enterprise structure:

  1. Goals of the organization.
  2. Resources at our disposal.
  3. Strategies for achieving above-mentioned goals –i.e., the methods used to deploy the resources.
  4. Tactics—i.e., the ways in which the deployed resources are used.

Strategy and tactics – integral part of Strategy Development – bridge the gap between goals and the methods used to achieve those goals.  These 4 dimensions of enterprise structure relate to one or both of the 2 domains; Policy and Management.  Policies determine the goals of an enterprise, whereas attaining goals is typically a matter of Management.  Tactics belong to the managers; strategy is the combined realm of the governors and managers; whereas resources are controlled jointly.

The employed resources through use of Strategies and Tactics give us “certain” conditions.  Inspecting them in light of the “desired” conditions enables us to determine future employment of the resources and thus emerges a pattern of actions and decisions which makes Strategy an adaptive and evolving view of what is required, to achieve goals.

We take a look at various perspectives on and definitions of Strategy, as explained by 8 of the most impactful and renowned Strategists in modern times.  Familiarity with the perspectives of these strategists enables us to develop a more holistic and thorough understanding of the topic, helping us improve our strategic thinking, decision making, and analytical skills.  All of these experts agree on the fact that Strategy is a means to implement a policy or a view envisioned by those who matter.  Let’s see how the following strategists define Strategy:

  1. Michael Porter
  2. Henry Mintzberg
  3. Treacy and Wiersema
  4. H. Liddell Hart
  5. George Steiner
  6. Kenneth Andrews
  7. Kepner-Tregoe
  8. Michel Robert

Let’s break down how a few of these renown strategists define “Strategy.”

Michael Porter

Michael Porter, the father of modern Business Strategy, views Competitive Strategy as “intentionally opting a collection of activities that are dissimilar to the competitors in order to provide a unique mix of value”– i.e. Competitive Advantage.  Porter states that Strategy is about:

  • A competitive position.
  • Differentiating yourself in the eyes of the customer.
  • Adding value through a collection of activities different from competitors.

Henry Mintzberg

Mintzberg is credited with co-creating the Organigraph.  He has written extensively on management and business Strategy.  His contribution to Organizational Theory in the form of “The Organizational Configurations Framework” is a model that describes 6 valid organizational configurations or Organizational Design.

Mintzberg argues that the contrast of changing realities with intentions necessitates accommodation, generating Strategy.  According to him Strategy is a combination of:

  • The Perspective – Vision and Direction.
  • The Position – Decisions to offer particular products or services in particular markets.
  • The Plan – a means of getting from here to there.
  • A Pattern in actions over time – for example, a company that regularly markets very expensive products is using a “high end” Strategy.

Treacy and Wiersema

Treacy and Wiersema’s Value Discipline Model talks about 3 different value disciplines: Customer IntimacyProduct Leadership, and Operational Excellence.  Their research on market leading organizations reveals that they outdid their competitors through mastering 1 of these 3 disciplines.

Treacy and Wiersema assert that companies achieve leadership positions by narrowing, not broadening, their business focus on any one of the following:

  • Operational Excellence – lead the industry in terms of price and convenience and is based on the Strategy of production and delivery of products or services. It implies world-class marketing, manufacturing, and distribution processes.
  • Customer Intimacy – Long-term customer loyalty and customer profitability is based on the Strategy of tailoring and shaping products to the increasingly fine definitions of Customer-centric Design.
  • Product Leadership – concentrates on quick commercialization of new ideas. It hinges on market-focused R&D as well as organizational nimbleness and agility.

Interested in learning more about the 8 definitions of Strategy?  You can download an editable PowerPoint on 8 Perspectives on Strategy here on the Flevy documents marketplace.

Want to Achieve Excellence in Strategy Development?

Gain the knowledge and develop the expertise to become an expert in Strategy Development.  Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

“Strategy without Tactics is the slowest route to victory.  Tactics without Strategy is the noise before defeat.” – Sun Tzu

For effective Strategy Development and Strategic Planning, we must master both Strategy and Tactics.  Our frameworks cover all phases of Strategy, from Strategy Design and Formulation to Strategy Deployment and Execution; as well as all levels of Strategy, from Corporate Strategy to Business Strategy to “Tactical” Strategy.  Many of these methodologies are authored by global strategy consulting firms and have been successfully implemented at their Fortune 100 client organizations.

These frameworks include Porter’s Five Forces, BCG Growth-Share Matrix, Greiner’s Growth Model, Capabilities-driven Strategy (CDS), Business Model Innovation (BMI), Value Chain Analysis (VCA), Endgame Niche Strategies, Value Patterns, Integrated Strategy Model for Value Creation, Scenario Planning, to name a few.

Learn about our Strategy Development Best Practice Frameworks here.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Stock Image 2 - Redeployment Assessment ManagementRestructuring becomes essential at some stage in the lifecycle of any organization.  In order to emerge triumphant through this tumultuous challenge, it is necessary that the focus remains on the challenges impeding the organization, Strategy Development to tackle the challenges, and prioritizing Strategic Initiatives to deliver radical results that lead the organization to Operational Excellence.

Redeployment is the most significant phase in the Restructuring process.  Within Redeployment, the Assessment phase is critical as the revitalization of the whole organization is dependent on correct Assessments and right placement of employees based on those Assessments.

Proper Redeployment Assessment Management is of utmost importance in Restructuring, and it should follow a structured approach, which means managing 5 core areas:

  1. Manage Assessment Team
  2. Manage Anxiety Level of Candidates
  3. Manage Amount of “Deviant Behavior” in the Assessments
  4. Manage Level of Duplicity, Wild Guessing, and Other Forms of Distortion
  5. Manage Amount of Feedback and Its Timing after the Event

Managing 5 core areas ensures smooth implementation of the Redeployment Assessment process, which is a major milestone of the Restructuring project.

The Redeployment Assessment process has to be detailed, accurate, and prompt.  Due Diligence in documenting the process, verifying particulars, and balance between Rapidity and Accurateness is essential because:

  • Organizational requirement to concentrate on post-restructuring environment is intense.
  • Employees’ urge to swiftly find out about their future is deep-seated.
  • Objections by employee stakeholders, as a consequence of large-scale retrenchment is high.
  • Probability of legal recourse by employees is also distinct.
  • Future Employee Engagement is dependent on fair Assessment and correct placements.

Assessments are based on Data Integration which involves a complex set of Data Points.  Therefore, Data Integration has to follow a strict process for it to be productive.  Following guiding principles will help in comprehensive and unbiased Data Integration:

  • Behavioral evidence, gathered throughout the assessment, should form the basis of discussion.
  • Weightage given to certain competencies should be based on the evidence gathered in assessments.
  • Decisions should be derived solely on the basis of evidence.
  • Facilitator, who is experienced in integrating assessment data and challenging assessors to support their assessment ratings with behavioral evidence, should be engaged.
  • Standards of performance should be very clearly defined against which individuals are assessed and assessment information is integrated.
  • To increase consistency, the chair of integration should present at each assessment session.

Grounded on these guiding principles, strict adherence to the following 8 Key Steps can steer the Data Integration phase in the right direction and make it productive:

  1. List all measures
  2. Weight all measures
  3. Identify minimum qualifications
  4. Create an overall score
  5. Quality and reality check
  6. Enter real data
  7. Review results
  8. Pool the candidates

Let us look at the first 3 steps in further depth.

1. List all measures

This list includes both qualitative and quantitative aspects, i.e., job performance data as well as the performance measures.

2. Weight all measures

Relevant weightage should be assigned to each measure.  Job performance measures normally have more weightage than the potential measures.

3. Identify minimum qualifications

It is important to build checks into the system for anomalies, such as someone scoring overall high while failing to meet the essential criteria.  For such eventualities a minimum qualification criterion has to be set.

Interested in learning more about the 8 key steps for Data Integration during Redeployment Assessment Management?  You can download an editable PowerPoint on Restructuring: Redeployment Assessment Management here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro LibraryFlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Stock image 2 - Reengagement after RestructuringRestructuring is a turbulent process that shakes the foundations of the organization.  The goal of Operational Excellence cannot be realized merely by the surgical removal of human resource during Redeployment after Restructuring.

Keeping focus on moving the organization forward with vitality means boosting the sagging morale of the employees who survive this storm.  It is the attention to the surviving employees that is going to kick-start the Revitalization process and usher in a new Organizational Culture.

Employee Engagement is an absolutely vital aspect of the revitalized organization.  Re-engagement of the remaining employees after Redeployment is important because:

  • It is a given that engagement levels will be abysmally low.
  • Motivation to work is not the top priority for most after Restructuring chaos.
  • Insecurity is high and employees may be thinking about leaving the organizations on the first opportunity they get.
  • The Revitalization of the organization depends on how the survivors are handled.

To handle such state of affairs, management must do the following:

  • Develop a concrete plan for Re-engagement during the Organizational Design.
  • Allocate appropriate time, effort, and budget for boosting motivation levels.
  • Implement Re-engagement plans that address the diverse Motivational Drivers.
  • Communicate consistently on an organizational level as well as individual level to reassure employees regarding their future.
  • Train line managers on how to handle surviving team members.
  • Push line managers to spend time with individual employees to learn:
    • How team members have handled the Redeployment process.
    • How employees sense the challenges moving forward.
    • What primarily motivates them as individuals.
  • Use motivational assessment methods and integrate the survivors into existing development discussions to align them with organizational processes.

Poor management of the Employee Re-engagement process is bound to have repercussions, such as:

  • Absenteeism
  • Low productivity levels.
  • Substandard customer service quality levels resulting in tarnished image of the organization.
  • Dwindling employees’ commitment to the organizations.
  • Increased risk of switch overs.

Active Employee Re-engagement ensures that the employees are:

  • Clear on the next steps.
  • Clear about their new roles.
  • Can effectively deliver against the new roles.
  • Keen to work in the evolving scenario.

Redeployment in the Restructuring process affects all employees regardless of whether they stay or leave.

Employees typically showcase 4 types of reactions during this transition:

  1. Departure Grief
  2. Survivor Relief
  3. Survivor Irritation
  4. Departure Happiness

Typically, the organizational focus is more on the employees who are leaving, assuming that those who get to stay are happy employees.  This may not be the case.  Care must be taken to address the motivational drivers of all employees in this transitory process.

Let us examine the Employee State, their Motivational Drivers, and appropriate Actions to take during Restructuring, a little more deeply.

Departure Grief

The motivational drivers that induce the state of “departure grief” in employees include:

  • Loss of earnings and benefits such as pension plan and health insurance can be stressful.
  • Loss of daily routine can be upsetting and takes some time to cope with.
  • Forced shift in lifestyle upsets not only the person but the family too which may take a psychological toll.
  • Feeling of rejection crops up as a result of being let go, lowering self-esteem.
  • Loss of financial empowerment puts the person, especially the head of the household, in a vulnerable position.

To help employees cope with Departure Grief, the organizational leadership should take some key actions, such as:

  • Help the ex-employees through counselling sessions.
  • Guide the employees in preparing job applications and CVs.
  • Assist the ex-employees get placed in alternative jobs.
  • Guide the ex-employees in putting the compensated amount to good use.

Interested in learning more about Re-engagement after Restructuring?  You can download an editable PowerPoint on Re-engagement after Restructuring here on the Flevy documents marketplace.

Want to Achieve Excellence in Business Transformation?

Gain the knowledge and develop the expertise to become an expert in Business Transformation. Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

“If you don’t transform your company, you’re stuck.” – Ursula Burns, Chairperson and CEO of VEON; former Chairperson and CEO of Xerox

Business Transformation is the process of fundamentally changing the systems, processes, people, and technology across an entire organization, business unit, or corporate function with the intention of achieving significant improvements in Revenue Growth, Cost Reduction, and/or Customer Satisfaction.

Transformation is pervasive across industries, particularly during times of disruption, as we are witnessing now as a result of COVID-19. However, despite how common these large scale efforts are, research shows that about 75% of these initiatives fail.

Leverage our frameworks to increase your chances of a successful Transformation by following best practices and avoiding failure-causing “Transformation Traps.”

Learn about our Business Transformation Best Practice Frameworks here.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro LibraryFlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

5 Dimensions of EE - Stock image 2Organizations typically focus on Customer-centric Design in their Strategic Planning and overlook the critical driver of Performance, Growth, and Operational Excellence—their employees.  With cut-throat competition now the norm the realization has become clearer that employees are:

  • The face of the business and create lasting—or perishing—brand impression.
  • Sources of innovation and organizational knowledge.
  • Representation of the company’s service philosophy.
  • Expected to live by its Organizational Culture and values.

Employee Engagement has emerged as one of the significant pillars on which the Competitive Advantage, Productivity, and Growth of an organization rests.  What, exactly, does it mean when an employee is engaged?  Employee Engagement, over the years, has been thought of in terms of:

  • Personal engagement with the organization.
  • Focus on performance of assigned work.
  • Worker burnout.
  • Basic needs (meaningful work, safe workplace, abundant resources).
  • Attention on Cognitive, Emotional and Behavioral components related to an individual’s performance.

Although Employee Engagement is widely seen as an important concept, there has been little consensus on its definition or its components either in business or in the academic literature.

Kumar and Pansari’s 2015 study define Employee Engagement as:

“a multidimensional construct that comprises all of the different facets of the attitudes and behaviors of employees towards the organization”.

The multidimensional construct of Employee Engagement has been synthesized into the following 5 components (or dimensions).

  1. Employee Satisfaction
  2. Employee Identification
  3. Employee Commitment
  4. Employee Loyalty
  5. Employee Performance

The 5 dimensions of Employee Engagement have been found to have a direct correlation with high profitability, as substantiated by a number of research studies:

For instance, a study of 30 companies in the airline, telecom and hotel industries shows a close relationship between Employee Engagement and growth in profits.  After controlling other relevant factors—i.e., GDP level, marketing costs, nature of business, and type of goods, the study found:

  • Highest profitability growth—10% to 15%—in companies with highly engaged employees.
  • Lowest level of profitability growth—0% to 1%—in companies with disengaged employees.

Research reveals that Employee Engagement affects 9 performance outcomes; including Customer Ratings, Profitability, Productivity, Safety Incidents, Shrinkage (theft), Absenteeism, Patient Safety Incidents, Quality (Defects), and Turnover.

The differences in performance between engaged and actively disengaged work units revealed:

  • Top half Employee Engagement scores nearly doubled the odds of success compared with those in the bottom half.
  • Companies with engaged workforces have higher earnings per share (EPS).

These 5 dimensions become the base for measuring Employee Engagement in a meaningful manner that permits managers to identify areas of improvement.  To assess an organization’s current status of Employee Engagement, a measurement system is needed that includes:

  • Metrics for each component of Employee Engagement.
  • A scale for scoring metrics in each component.
  • A comprehensive scorecard that pulls everything together.

Let us delve a little deeper into the first 2 dimensions of Employee Engagement.

Employee Satisfaction

Definition

Employee Satisfaction is the positive reaction employees have to their overall job circumstances, including their supervisors, pay and coworkers.

Details

When employees are satisfied, they tend to be:

  • Committed to their work.
  • Less absent and more productive in terms of quality of goods and services.
  • Connected with the organization’s values and goals.
  • Perceptive about being a part of the organization.

Metrics

The 5 metrics that gauge Employee Engagement in terms of Employee Satisfaction include:

  1. Receiving recognition for a job.
  2. Feeling close to people at work.
  3. Feeling good about working at the organization.
  4. Feeling secure about the job.
  5. Believing that the management is concerned about employees.

We take a look at another dimension central in significance.

Employee Commitment

Definition

Signifies what motivates the employees to do more than what’s in their job descriptions.

Details

Employee Commitment is much higher for the employees who identify with the organization.  This element:

  • Develops over time and is an outcome of shared experiences.
  • Is often an antecedent of loyalty.
  • Induces employees to guard the organization’s secrets.
  • Pushes employees to work for organization’s best interests.

Research has found that employees with the highest levels of commitment:

  • Perform 20% better.
  • Are 87% less likely to leave the organization.

Metrics

The 3 metrics that gauge the Employee Commitment dimension of Employee Engagement include:

  1. Commitment to deliver the brand promise along with knowledge of the brand.
  2. Very committed to delivering the brand promise.
  3. Feels like the organization has a great deal of personal meaning.

Interested in learning more about these foundational pillars to Employee Engagement? You can download an editable PowerPoint on 5 Dimensions of Employee Engagement here on the Flevy documents marketplace.

Are you a Management Consultant?

You can download this and hundreds of other consulting frameworks and consulting training guides from the FlevyPro library.

As the business and operating environment changes, there has been a greater demand for transparency and accountability as to the integrity of internal control. Thispic 1 COSO Framework has become very critical today as businesses drive to enhance the likelihood of them achieving their objectives and be able to adapt to changes in the global business environment.

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) released in 1992 the Integrated Internal Control Framework that will enable organizations to effectively and efficiently develop and maintain systems of internal control. It also includes enhancements and clarifications that will provide organizations the ease of using and applying the Framework.

An Overview of the COSO Framework

The COSO Framework is the globally recognized framework for designing, implementing, conducting, and assessing internal control. It is recognized as the definitive standard against which organizations measure the effectiveness of internal control systems.

If we look at the internal control, this is not a serial process but a dynamic and integrated process. It is a process effected by an organization’s Board of Directors, Management, and other personnel designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance. It can be considered an enabler when it comes to achieving Operational Excellence.

The COSO Framework provides for 3 categories of objectives. These categories allow organizations to focus on different aspects of internal control. It ensures that the internal control system is operationally efficient and effective, reporting reliable data, and remain compliant to laws and regulations.

The 5 Components of the COSO Framework

In an effective internal control system, 5 Components of the COSO Framework must be present to support the achievement of an organization’s mission, strategies, and related business objectives.

Component 1: Control Environment. This is a set of standards, processes, and structures that provide the basis for carrying out internal control across the organization.

Component 2: Risk Assessment. This forms the basis for determining how risks will be managed. It involves a dynamic and iterative process for identifying and assessing risks to the achievement of objectives. It determines the possibility that an event will occur and adversely affect the achievement of objectives.

Component 3: Control Activities. The 3rd component ensures that Management’s directives to mitigate risks to the achievement of objectives are carried out. These are actions that are established through policies and procedures. It may be preventive or detective in nature.

Component 4: Information and Communication. This component focuses on the generation of relevant and quality information to support the functioning of other components. It is a continuous iterative process of providing, sharing, ad obtaining the necessary information. This is necessary to enable businesses to carry out internal control responsibilities to support the achievement of its objectives.

Component 5: Monitoring Activities. Monitoring activities, as a component, ascertains whether each of the 5 components of internal control is present and functioning. It includes the conduct of ongoing evaluations, separate evaluations, or a combination of both.

The 5 Components of the COSO Framework are essentially important as they represent what is required to achieve the objectives and the organizational structure of the organization. Each component has its underlying principles and key elements to better guide organizations in putting the components in place.

Additional Key Considerations

The COSO Framework sets the requirements for an effective system of internal control. An effective system reduces, to an acceptable level, the risk of not achieving the organization’s objectives.

There are additional key considerations that organizations must take note of. One consideration is that each of the 5 components and relevant principles is present and functioning. Present refers to the determination that the components and relevant principles exist in the design and implementation of the system of internal control to achieve specified objectives. Functions refer to the determination that the components and relevant principles continue to exist in the operations and conduct of the system of internal control to achieve specified objectives.

Interested in gaining more understanding of the COSO Framework? You can learn more and download an editable PowerPoint about COSO Framework here on the Flevy documents marketplace.

Are you a management consultant?

You can download this and hundreds of other consulting frameworks and consulting training guides from the FlevyPro library.

A commonly quoted statistic is that 80% to 95% of the cost of a product is determined by its design and is therefore set before the item enters manufacturing. This pic 1 5 Cost Management Strategiesassumption suggests that the dominant focus of Cost Management should be during Product Development and not during Manufacturing.

However, contrary to a widely held assumption, companies can integrate a variety of Cost Management techniques not only in the design phase but throughout the product life cycle.  This is to ensure that there is a substantial reduction in costs.  In fact, companies achieving Operational Excellence and competing aggressively on cost might consider the adoption of some form of an Integrated Cost Management Program that spans the entire product life cycle.

An organization must have a good understanding of Integrated Cost Management and the 5 Cost Management Strategies that they can use to reduce costs but still attain the desired level of functionality and quality at the target costs.

The 5 Cost Management Strategies

 The 5 Cost Management Strategies play a crucial role in the company’s integrated approach to Cost Management.

The 5 Cost Management Strategies can be applied throughout the product life cycle with one technique used during the product design and the rest during manufacturing.

  1. Target Costing. This is a technique applied during the design stage. Target Costing is best used when the manufacturing phase of the life cycle of a product is short.
  1. Product-specific Kaizen Costing. This is a technique applied during the early stages of the manufacturing phase. It enables the rapid redesign of a new product to correct for any cost overruns. The primary rule in Product-specific Kaizen Costing is that the product’s functionality and quality have to remain constant.
  1. General Kaizen Costing. The third Cost Management Strategy, this technique is applied during the manufacturing phase. It focuses on the way a product is manufactured with the assumption that the product’s design is already set.  This technique is effective when addressing manufacturing processes that are used across several product generations.
  1. Functional Group Management. This is the technique that is applied in the production process. Functional Group Management consists of breaking the production process into autonomous groups and treating each group as a profit instead of a cost center. The switch to profit as opposed to cost allows groups to increase the throughput of production processes even if changes result in higher costs. It enables the change in mindset that functional group management induces.
  1. Product Costing. The 5th Cost Management Strategy, this is the technique that coordinates the efforts of the other four techniques. It does coordination work by providing the other four techniques with important, up-to-date information.

Target Costing vis-a-vis Kaizen Costing

Kaizen Costing as known as continuous improvement costing.  It is a method of reducing managing costs. Kaizen Costing has a similarity with Target Costing but it also has its differences.  (Note: Kaizen is the Japanese term for Continuous Improvement and often tied to the philosophy of Lean Management.)

Both Kaizen Costing and Target Costing can achieve results with lower resources. This is basically their similarity. On the other hand, the differences lie in their usage and involvement.

Target Costing is used on the design stage and requires the involvement only of designers. On the other hand, Kaizen Costing is used during the manufacturing stage and requires high involvement of employees.  The general idea of Kaizen Costing is to determine target costs, design products, and process to not exceed those costs.

Interested in gaining more understanding of these Cost Management Strategies? You can learn more and download an editable PowerPoint about 5 Cost Management Strategies here on the Flevy documents marketplace.

Are you a management consultant?

You can download this and hundreds of other consulting frameworks and consulting training guides from the FlevyPro library.

Post-merger Integration is a highly complex process. It requires swift action as well as running the core business activities simultaneously. There is no one-size-fits-pic 1 Post-merger Integration (PMI) Integration Checklistall approach to a successful PMI Process. However, careful planning focusing on the strategic objectives of the deal and the identification and capturing of synergies will help maximize deal value.

Because of the complexity of the PMI process, it is of utmost importance that organizations—both the Buyer and Target, the integration team, and integration manager—have a guide that will provide them the detailed requirements of the process. The Post-merger integration framework has a structured approach that can direct attention to important integration areas to maximize deal value and achieve Operational Excellence. The inability to focus on priority areas can be a waste of resources, time, and investments.

The 12 Integration Areas

The Post-merger Integration framework drives a structured approach to identify important Integration Areas to focus on during the transition. There are 12 Integration Areas that need to be prioritized.

The first 2 integration areas within the full checklist:

  1. Finance & Accounting (F&A). This is an integration area that is focused on establishing the financial sustainability of the new organization. Financial & Accounting needs clear instructions and templates for financial reporting at Closing. The better the information, the few surprises there are due to poor reporting or absence of data. Financial & Accounting has 9 sub-areas that are essentially important for organizations to have a good appreciation and understanding of.
  1. Legal. The role of the legal function does not end at the Closing. Many legal items need to be listed and considered immediately after the Closing. Special events, such as acquisitions of minority shares or the formation of joint venture companies must be considered. Legal is one vital area in building the sustainability of the new organization.

The next 2 integration areas within the full checklist:

  1. HR & Personnel. Integral in the Integration Process, HR & Personnel is a key area in integration. Management of the HR Integration Team is a primary responsibility of the Buyer’s HR manager. There are 5 sub-areas under HR & Personnel that must be given important consideration.
  1. Corporate Communications. Successfully using the Buyer’s and Target’s corporate communication functions for announcing and explaining PMI progress is a net sum of many factors. Essentially, communicating PMI progress requires the effective use of the corporate communication functions of both Buyer and Target.

The third 3 integration areas within the full checklist:

  1. Information Technology (IT). The goal of the ICT Integration Process is to link the ICT networks of the acquired entity with the Buyer’s corporate ICT network. It is necessary to facilitate access to systems and services provided by the Buyer and collaborate with business/market areas. Often, the integration process is let by an ICT individual from the Buyer’s corporate/company ICT or business/market area ICT.
  1. Corporate Culture. Corporate culture has increasingly become a critical factor in integration success, particularly in cross-border M&A. An M&A deal often impacts on corporate culture, both on the Buyer’s and the Target’s side.
  1. Sales & Marketing. This is a difficult sensitive area to be changed in the integration process. Sales & Marketing contribute largely to organizational financial stability, hence primary consideration must be undertaken.

The last 5 PMI integration areas within the full checklist:

  1. After Sales & Service. This is increasingly becoming important in value creation. It is an added-value that strengthens Sales & Marketing capability to sustain the market.
  1. Supply Chain Management (SCM). This is undertaken at a later phase of integration as the fundamental change requires detailed planning and calculation.
  1. Production. This is one critical area where more experience and planning are required in decision making.
  1. Technology. The extent to which the integration focuses on Technology and R&D depends on the M&A strategy. If the purpose of the acquisition is to gain technology or strengthen existing capabilities, then this is when the integration will focus on technology.
  1.  Synergies. This an integration area that can mean new strengths and opportunities from combined knowledge and experiences.

Organizations must take adept steps in undertaking the Integration Checklist as this will enable both the Buyer and the Target to reach the most strategic state necessary for the 12 Integration Areas.

Interested in gaining more understanding of the Post-merger Integration (PMI) Integration Checklist? You can learn more and download an editable PowerPoint about Post-merger Integration (PMI) Integration Checklist here on the Flevy documents marketplace.

Are you a management consultant?

You can download this and hundreds of other consulting frameworks and consulting training guides from the FlevyPro library.