1organization Development matters

8/17/2019 1organization Development matters

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ORGANIZATIONDEVELOPMENT SPECIALIST

PROGRAM

ORGANIZATION DESIGN WORKSHOP FOR21st CENTURY TO CREATE VALUE

By Pungki Purnadi for ValueConsult


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WORKSHOP OBJECTIVES

This workshop will help the

participants in

Understand the theories and theirapplication

Know best practices

Develop the suitable 21st centuryorganization to create value


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MANAGING ORGANIZATION

DEVELOPMENT

BACKGROUND SUMMARY

By Pungki Purnadi


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CONTEXT OF MODERN

ORGANIZATION

Modern organizations are operating in arapidly changing environment

“The way they do business” had to

change in order to survive and grow “Downsizing” and “mergers” are common

Change has exacted tremendous toll on

the human & financial resources ororganizations


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WHY ORGANIZATION

DEVELOPMENT ?

OD is planned change applied toorganizations

It enables an organization to

systematically reshape its processesin order to become more competitive

It is a means for reducing the human

& financial cost of organizationchange


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WHAT CAN BE LEARNED FROM

ORGANIZATION DEVELOPMENT ?

The nature of organizations asopen systems

Principles for managing organization

change Identifying organization strength,

weakness, opportunities & threats

Recognizing organizationalreadiness for change


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ORGANIZATION AS OPEN SYSTEM

Open SystemInput Output

External Factors

Internal Factors


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The Influencing Factors - Internal

Vision, Mission, Value, Philosophy

Organization Culture (may overlap with the above)

Transparency & Clarity

Office Politics

Organization Size (small, medium, big)

Organization Geographic Size (local vs regional vsworld wide)

Organization Hierarchy (subsidiary vs corporate /

holding) Profit Centers vs Cost Centers

Organization Life Cycle Stage (Starting-Up, Growing,

Maturing, Declining)


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The Influencing Factors - External

Rivalry among similar industry

Entry of new comers

New initiative / blue ocean strategy ofcompetitors

Change of market demand Change in technology

Government (Regulation, Change, Condition) Disaster / Force Majeur / War

Economic situation (macro economic, oil price,foreign exchange, GDP, etc)


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Business

Strategy

Business

StrategyBusiness

Process

Business

ProcessOrganization

Structure and People

Organization

Structure and People

ZZZz...

Organization, Mission/Purpose

Details of OrganizationOpen System

Input Output

External

Factors


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WHAT CAN BE LEARNED FROM

ORGANIZATION DEVELOPMENT ?

Choosing appropriate changestrategies

Designing a change process

Setting up structures to support achange process

Establishing indicators of success

Ways of surviving & growing as anagent of change


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DEVELOPMENT

RECENT ORGANIZATIONAL TRENDS

By Pungki Purnadi


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RECENT ORGANIZATIONAL

TRENDS

ORGANIZATIONAL CHALLENGES IN

THE 21st CENTURY

Keep abreast in global competition Create value-add through

intellectual capital (as opposed tophysical and financial capital)

Manage risk in global capitalism


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TRENDS

ORGANIZATIONAL REQUIREMENTS IN THE

21st CENTURY

Think globally, act locally

Is structured to enable speedy decisions

Evolve to provide value added service

Build empowered professional teams


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TRENDS

ORGANIZATIONAL REQUIREMENTS IN THE

21st CENTURY

Flatter organization

More authority/responsibility to lines

Self-management

Check & Balance in corporate governance Global culture development


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A CONCEPT OF ORGANIZATIONAL

ARCHITECTURE

1. The assignment of decision making

authority2. The systems for evaluating the

performance of both individualsand business units

3. The methods of compensating

individuals

The determination of strategy


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The determination of strategy,

organizational architecture and firm

valueTechnology

-Computers- Telecom

- production method

Strategy-Choice of industries

- Basis for competition

(price, quality, service)

Markets-Competitors-Customers- Suppliers

Regulation-Taxes

- Antitrust- International

Organizational Architecture-Decision Authority

- Compensation System

- Performance Mgt.

Incentives & Actions

Shareholder value

Business Environment


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ORGANIZATION CONCEPT

Organization, Strategy, and

People issues are interrelated. Wecannot have a proper organization ifwe consider them separately evenwhen we are only requested tosolve part of the issue.


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ORGANIZATION CONCEPT

A set of actions to ensureCompetitive/sustainable

advantage

A state of people &Organization which

Continuously generatescompetitiveadvantage

“Organization follows Strategy”

StrategyOrganizationPeople

“Strategy follows People” Jack Welch

ganization=PeopleStrategy=Or

Traditional Concept New Concept

Relationship

ToOrganization& People

Strategy

Definition

Se q u e n t i a l Co n cu r r e n t


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CONCEPT OF INNOVATIVE

ORGANIZATIONTo be innovative, organization concept has been completely changed

CREATIVE DESTRUCTION OF ORGANIZATIONS

COO

CEO

Division

Pyramid

BusinessUnits

Center

Characteristics : rigid & stable position, top down,seniority based pay & promotion

TopManagementteam

TeamLeader

Member

BusinessTeam

Empowered Teams

Characteristics : short layers, team on life-cycle, bottom-

up & top-down, market based pay & frequent change between team leader & members, free choice of career

E l f B i Ch ll


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Internal

External

Example of Business Challenges

towards your organization

COMPANYFormal Structure Culture &Behaviour

Capabilities

Strategy

• Insufficient Planning

• More effective

communication of our

Strategy (Adaptive Strategy)• Inter-department teamwork/clear SLA is

required

• Strong commitment & ownership from BOD is

required to ensure implement-ability

• Asset Mgr need to have entrepreneur ial &portfolio management mindset

• Lack of HSE mindset

• Lack of focus in knowledge retention and management

• Certain process handover is no t optimal

• Certain process is not implemented properly

• Unclear accountability, roles

and responsibility• To what extent wil l

Management delegate

decision-making authority to

the Assets in the new

organization model

Process Tech People

• Do not leverage

technology (IT and

technical) to its

advantage

• Need to have formalized competency model

• Need to have a clear succession program

• Current remuneration is not competitive to attract

best talent

• Career model needs to be clarified

• Training curri culum needs to be updated

• Need to formalize performance management

Partners/Vendors

Regulatory

Bodies/Territory

• Increasing demand of local participation

• New labor regulations (re Outsourcing,contract employee)

• New Frontier

• Improving leverage and relationship with

vendors

• Optimize Process and Technology


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Structure

Menunjukkan bagaimana suatustruktur organisasi didesain

untuk mengelola relasi antar

unit didalamnya

ModelModel Komprehensif Komprehensif untukuntuk MendiagnosaMendiagnosa OrganisasiOrganisasi

CultureNilai, norma dan kultur yang

dianut bersama dan tercermin

dalam perilaku para anggota

organisasi

PeopleKualitas kompetensi dan

komposisi demografis para

anggota organisasi

Strategi

Menunjukkan bagaimana

organisasi merumuskan

strategi untuk mewujudkanmisi dan visinya

System

Sistem, kebijakan danprosedur kerja yang

dijalankan oleh organisasi


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CeklistCeklist PertanyaanPertanyaan untukuntuk DiagnosaDiagnosa EfektivitasEfektivitas

OrganisasiOrganisasi dandan PengelolaanPengelolaan SDMSDM

Elemen Pertanyaan untuk Diagnosa

Strategi Apakah strategi yang disusun telah mengacu pada dinamika

lingkungan pasar dan peningkatan proses bisnis kunci? Apakah strategi yang disusun telah diterjemahkan dalam

serangkaian indikator kinerja yang terukur?

Apakah strategi ini sudah dikomunikasikan dan dipahami oleh

segenap karyawan? Apakah scorecard karyawan telah

dikaitkan dengan arah strategi perusahaan?

Sistem Apakah telah tersedia sistem yang baku serta solid dalam

beragam bidang kunci, semacam sistem manajemen mutu,

sistem pengembangan SDM, sistem informasi manajemen,

dan sistem informasi pasar & pelanggan? Apakah serangkaian

sistem ini telah diimplementasikan dengan konsisten danbagaimana hasilnya?


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Elemen Pertanyaan untuk Diagnosa

Struktur Apakah struktur organisasi yang ada saat ini merupakan

pilihan yang paling optimal? Apakah tidak terjadi overlapping

antar bagian? Apakah span of control telah didesain dengan

efisien?

People Berapa tingkat rata-rata kinerja dan kompetensi karyawan?

Bagaimana kinerja dan kompetensi mereka diukur? Apakah

terdapat proses pengembangan kompetensi yang sistematis

dan berkelanjutan?

Culture Apakah jenis budaya yang berlangsung di perusahaan saat ini?

Jenis nilai dan budaya perusahaan apa yang diharapkan?

Apakah nilai dan budaya yang diharapkan telah dipahami dan

diaplikasikan oleh segenap karyawan?

CeklistCeklist PertanyaanPertanyaan untukuntuk DiagnosaDiagnosa EfektivitasEfektivitas

OrganisasiOrganisasi dandan PengelolaanPengelolaan SDMSDM


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How about your company organization ?

Exercise 20 minutes.

Define your internal factor and external factor whichwill influencing your organization performance

towards your company business plan.


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DEVELOPMENT

ORGANIZATIONAL COMPONENTS

By Pungki Purnadi


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ORGANIZATIONAL COMPONENTS7S of McKinsey STRATEGY

STRUCTURE

SYSTEM STAFF SKILL STYLE

SHARED VALUE

Content Select & focus/streamline the

process Strategic Biz Unit (SBU) /

Functional Unit - Matrix /Flexible Teams – Authority ondecision making (resource,people, budget) –Accountability/mission/roles

HR (HRIS) Finance… People Organization Skills Leadership style,

Communication style, Decision

making style Common shared philosophy /values


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MCKINSEY’S 7S FRAMEWORK


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Strategy: the direction and scope of the company over the long

term.

Structure: the basic organization of the company, its

departments, reporting lines, areas of expertise and

responsibility (and how they inter-relate).

Systems: formal and informal procedures that govern everyday

activity, covering everything from management informationsystems, through to the systems at the point of contact with the

customer (retail systems, call center systems, online systems,

etc).

THE HARD S’s


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THE SOFT S’s

Skills: the capabilities and competencies that exist within the

company. What it does best.

Shared values: the values and beliefs of the company.

Ultimately they guide employees towards 'valued' behavior.

Staff: the company's people resources and how the are

developed, trained and motivated.

Style: the leadership approach of top management and thecompany's overall operating approach.

Wh i i i l


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What is your company organizational

component ?

Exercise 20 minutes

Please use Mc Kinsey model to analyze your Hard Sand Soft S within your company organization.

Please also give the example tools of each “S” whichyou have in your current organization.

Please check the alignment of your “S” within your

organization and later please check each of your “S” tool for their value to the organization.


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DEVELOPMENT

ORGANIZATIONAL DESIGN

By Pungki Purnadi


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Clarify Business & Organization Model

MODEL

STRUCTURE

PEOPLE

HRM

Function/Role based

* Single Function specialist

* Entrepreneur

* System Creation Professional

- MBO(Management By Objective)

- Skill Based Pay

- Productivity Control

Ameba TypeModel

Project Team based

* Self management Professional

* Entrepreneurial Professional

- Performance Assessment

- Up or out

System InnovationModel

Cl if B i & O i i l M d l


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Clarify Business & Organizational Model

GROUP COMPANY MANAGEMENT( Extended GE Model )

Separation of Professionals &Operational Staff

Attract & Retain

Leader Development FieldTeam

Team

Team

ManagementTeam

BU LeaderProfessional

Trainee

Group Companies

Cl if B i & O i ti l M d l


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Clarify Business & Organizational Model –

CORPORATE GOVERNANCECorporate Government needs to be shared amongst functions

Advisory BoardExtend HypothesisAdvisor

PlanHypothesisCEO

JudgeHypothesisBoard

Check

CFO

Do

COO

NominatingCommittee

Reward

Committee

Cl if B i & O i ti l M d l


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Group Company ManagementWhilst sharing common platform, different Org. & HRM are used to fitthe different market segments.

HQ ( Holding Company )

BusinessA

BusinessB

BusinessC

GroupPlatform

Clarify Business & Organizational


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Clarify Business & Organizational

Model – Core Platform DesignGroup Platform is an important organization structure

A

BC

D

G

H

Operation ( D/SCM )

Technology * Knowledge Management

Human Capital

Brand

Finance

F

E

Operation ( D/SCM )

Thickness

Business Portfolio “Win” Model

CompetitivenessBreak PointLine

GroupPlatform



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y g

Group Company Management

The CITIGROUP example

Business groups are categorized by key markets but sharing central

Resources.Management Committee

CitigroupGlobal

Consumer group

Global Corporate & Investment Bank

Citigroup GlobalInvestment

Management

CitigroupInternational

GlobalInvestmentBanking &Global

RelationshipBanking

Citibanking Cards

Citi-Financial

PrimericaFinancialServices

TheCitigroupPrivate

banking

CitigroupAsset

Management

GlobalRetirement

Services

CitigroupAlternativeInvestment

TravelersLife &

Annuity

Citi-Capital

Global

Equities

GlobalFixed

Income

CitibankE-business

CitibankGlobalSecuritiesServices

SalomonSmithBarneyGlobal

Private

Value System Management


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Value System Management

There are three manners organizations can assess people’s valueContribution.

ValueAppreciation

ValueSharing

ValueDefinition

CreationValue

MarketValue

TimeValue

People’s Value Contribution Organization Value System

Point : - Value related people needs to be defined/shared/appreciate byorganizational value system

- Perceived value will be reflected by various kinds of rewards.

- When organization changes, value system should be redesigned

Develop Organization Messages


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Develop Organization Messages

How organization structure themselves speak about what theyvalue to their customers and employees

CEO

Hierarchy Top Customer Top

CEO

CEO

Role FlowPyramid Style

Breakdown Style

Examples Army

Traditional Coy

Retail

Ford

Hi-tech Coy

Decide Organizational Dimensions


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Decide Organizational Dimensions

To design an organization structure, its dimensions should beconsidered first

Layer of Responsibilities

Product/Service

Region

Channel/Customer

Function

Dimension Examples

- Global region- Inside Country

- Global function

- Type of production

- Global/local account- National / local chain

- Consumer / Industrial- Labor intensive / Talent based

Develop Structure


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Develop Structure

CEO

Functional Unit

ProductionR & D Sales


Business Unit

Efficient to manage big platformsGood at accumulating expertise

Can lose customer focusDifficult to follow diversified needs

Pharmaceutical, Steel, Automobile

Quick response to marketGood at developing managers

Duplication of functionsDifficult to invest in cross BU filed

Electronics, Specialty Chemical

CEO

+

_

Eg.

Develop Structure


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Develop Structure


CEO

Matrix Organization

Can leverage merits functional, BU organizationCan meet diversity business

Double boss problemComplex

Consulting firms

Organization will havematrix nature as they

become global andknowledge based

+

_

Eg.

Develop Structure – Illustration of How


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Logic Tree Works in Org. Design

Factors affecting profit can be disintegrated into two areas, salesrevenue and cost. Revenue is influenced by other factors such asvolume and sales prices, which are then affected by…….

Example

How to increaseThe profit of Product A ?

How to increaseSales revenue of

Product A in

Existing marketSegment ?

How to decreaseThe cost of Product A ?

How to increaseSales volume ?

Can sales pricebe increased ?

( V )

( P )

( C )

Profit= (P-C) V

Graph A

Develop Structure – Illustration of How


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Develop Structure Illustration of How

Logic Tree Works: Graph A

How to increaseSales volume ?

Can Product AIncrease in

Existing marketSegment ?

Can Product Aextend to other

market segment ?

Can Product AIncrease theMarket share

in existingMarket segment ?

Can the size of Market segmentBe expanded ?

Can Product A modify toBetter suit the market(i.e. customer needs)?

Can sales networkbe strengthened?

Can product A bePromoted to more people(e.g. through advertising

on sales, PR ) ?

Can pricing strategy beChanged to increase

Market share ?

Can the size of wholeMarket be increased ?

Within the whole marketCan the share in the

Segment be increased ?

Sales Dept

New AccountSales Division

Current AccountSales Division

MarketingSection

SalesSection

Important elements to beconsidered.

-Basic needs of customer-Value of competitor produc

-Movement of sales in differentchannel or region-Competitiveness of serviceand delivery

-Brand awareness by customers-Analysis of customer decisionmaking process

-Price elasticity-Payment methods

-Forecast of whole market

demand

-Factors affecting the sizeof market segment in theWhole market-Trends & movement offactors-Possibility of geographical expansion

-Product extension to users outsides the market segment-Cost implication associated with expansion

t

Develop Structure –


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Breaking Down Objectives

Beginning from the department issue to setting the departmentobjectives, a logic tree can be develop to show how a specificobjective is established to attain the department objective.

3 years later,reach XX

Objective setare XX

It is necessary to increase

sales to customer A by OO

A

B

C

D

To reach XX,this XXXshould be

done

To reach XX,this XXX

should bedone

DepartmentIssue

DepartmentObjective

Logic Tree showing how specific objective is development SpecificObjectives

Specific Objectives (overall)

Develop Structure – Understand


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Develop Structure Understand

Member’s Ability & Share Objectives

ooo should be doneto increase the sales

customer

A

B

C

D

Sharing of Objectives to Individuals

Specific Objective Individual Objective

Expected role is shared

Between the two people

Current abilities can handlethe above objective

Multi objectives can beassigned

Although team leader hasassigned task to thisIndividual, team leader stillneeds to observe theperformance

People with ability

assigned to thisobjective

Specific Objective

( Overall )

Develop Structure – Hybrid Structure of

O i ti l Di i


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Organizational Dimensions

Channel

Type of Service/Product

Region

Function

Direct

Indirect

Global

Country

Region

Global

R & D

Production

Sales/Marketing

Local

OrganizationalDimension

Dimension Type Choice of structure

Check points

- Conflict of Interest

- Synergy of expertise

- Center of excellence

- Economy of scale

- Span of control

x

x

x

xx

x

x

Develop Structure –

Objecti e Setting in PDCA C cle


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Objective Setting in PDCA Cycle

PDCA is a police management tool used by management to manage annual strategy.Information from external environment & internally from the company is fed into thecycle as inputs.

Suppliers Competitors Customer Market Your company

Opportunities & Threats Strengths & Weakness

1. Plan

- Collect information- Set strategic plan- Hypotheses

2. Do

Set objective

(Management by objective)

Discuss objective withindividual

3.Check

•See performance & share results

•Mid-term review (on-going feedback•Evaluate performance

4. Action

Feedback & coachingPeople development

- Logic- Cascade objective

KPIs


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What is your organization design ? Based on what (strategy, organization –

business process, people and itschallenges) ?

Which organization design match withyour company in the future ?

Which organization model match withyour company ? (function, asset, matrix,or hybrid)

SUMMARY PRACTICE –


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HOW TO DESIGN ?

1. Develop the Organization Objective and KPI

2. Develop the Value Chain3. Develop Process Flow, Policy and Procedure

4.

Design the Organization Structure5. Do the Staffing / Find the candidates to fill the

positions

6. Develop Organization Capabilities

7. Develop Position Description

SUMMARY PRACTICE –


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HOW TO DESIGN ?

8. Conduct Job Evaluation

9. Decide Grading and Salary

10. Ensure cost center alignment

11. Check information & document flow

12. Design sitting arrangement

13. Conduct required Training

14. Communicate to the related parties

15. Plan for Transition period

16. Measure the achievement and effectiveness


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DEVELOPMENT

LINK WITH HRM

By Pungki Purnadi

Review HRM System


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HRM should be reviewed to ensure alignment to organizational goals

StrategyOf Businessunits

XXX Business

Group(XY Branch)

ADMIn

CUSTo

SALEs1

23

456

Leader

12

3

45

6

RangeManagement

Incentive

Competency Grades

For Individuals

Team goal &

Individual Role

+

Annual salary

Model of an Integrated HRM system

Judgment

Basicapproach

Strategic valuationbased on analysis of the business environment

(yearly)

Evaluate performance(competency) that isExhibited consistently

to decide on grade

Define the range of absolute amountsfor each grade

on market levels

Link Achievement’s Level of Challenge


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To avoid low level target, evaluation of target’s level of challenge

level & achievement is essential

Incentive linked with Band/Job standard

50100

Low High

150

Achievement

Band 5Standard Level

Band 4Standard Level

Band 3

Standard Level

The lower the challenge,the less the opportunityfor higher return

Challenge level can belinked to bands levels

High

Level of Challenge

Equal Amount Line

Understand & Manage Culture


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g

INTRINSIC

TRADITION

ETHICS VALUES

EXTRINSIC

ATTITUDESBEHAVIOUR

GESTURE

ATTIRE

TRAITS

Culture is more than what we can see….but the problem is weoften act on what we see only



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Geert Hofstede’s Four Dimension of Culture

Power DistanceThe extent to which people accept differences in power &

wealth distribution Individualism (vs Collectivism)

In individualist cultures, individual uniqueness isemphasized. Members in collectivist cultures form andwork in groups which protect them in exchange for

loyalty. Uncertainty Avoidance

The degree to which people avoid new, unstructured anduncertain situations.

MasculinityIn masculinity-oriented societies, people live to work. Infeminine cultures, members work to live and place moreemphasis on quality of life


Areas of Culture Differences


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Areas of Culture Differences

Organizational Hierarchy

Information / CommunicationChannels

People Philosophy Decision Making Process


Some Communication Tips


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Some Communication Tips

Always clarify even if you think youunderstand

The devil is in the details

Paraphrase to confirm understand

Use simple words Do not stereotype, do not assume

Acknowledge differences

Do your homework Develop own language for identical

organization

CONTRACT

To

communicate

….

Is your current organization match with


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your company HRM ?Is there a unit whom handle the organization development ?

How is the other HR system and tools influence byorganization development ?

What is the implication of organization development to your1. Compensation & benefits system ?

2. Performance management system ?3. Authority / Decision Making process ?4. Career Management system ?5. Competency Based management system ?

6. Manpower – Succession – Replacement planning ?7. Recruitment & placement system ?8. Training & development system ?


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DEVELOPMENT

IMPLEMENTATION OF ORGANIZATION

By Pungki Purnadi

Resource Planning


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Guideline for resource allocation

Number of direct reports of variousresponsibilities should be limited to amaximum of 12

For single unit control, class room numberis the maximum (ie.50 people)

Market mechanism should be used afterinitialization Motivate people for using less resources Management accounting will help (tax on head

counts)

Resource Matching –

C t i i T l t


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Categorizing Talent

Generalist

Specialist Professional

Entrepreneur

Maintaincurrent System

Innovate for fewbusiness, solution

Increasingly importantin the 21st century

OrganizationalLeader

Problem solver

New Organization Exercise


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New Organization Exercise

New Role / Expected Action

Present Expected

Sales A aaa AAAR&D B BBB bbbMarketing C ccc CCCHQ D DDD dddProduction E eee EEE

Case 1

If I were you, I wouldgo & see them. Thenparticipate in….

R&D Director - LA

R&D Director - Tokyo

I will ask mysubordinate to submitprogress reportsregularly

Sales – Taipei

Facilitator

Case 2Issue of Cross

Division

Case 3Case 10

Management Role-Plays (MRP)Description are not enough to encourage new organization behaviour.Role plays using vivid cases are a good exercise

Market Mechanism Implementation


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Initial resources will be improved throughmarket mechanism

HQ should be treated as Profit Center

Managerial accounting can be used toreduce indirect cost HQ cost on # of employees, labor cost of the

division Natural People flow will be realized with

fair market

Recruiting/ Job posting/ Termination

Market mechanism will realize the best matching betweenpeople & organization by reducing the inefficiency


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MANAGING ORGANIZATIONDEVELOPMENT

SAMPLE OF ORGANIZATION DEVELOPMENTPROJECT DESIGN

By Pungki Purnadi

Sample OD Project outline:


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Project Objective

Phase I (10 wks)- Main Activities

- Project Organisation

- Deliverables

Phase II (16 wks)- Main Activities

- Project Organisation Options

- Deliverables

Phase III

Implications of Time-boxing & Selected Project Organisation

Cost

Phase I: Main activities (sample)


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Phase 1 – Diagnostic and High-Level Blueprint - Time Line and Key Activities (preliminary)

Notes:

1. Including workshop(s) with the Senior Management Team

2. Includes definition and scope of all assets

3. At this point, leadership and ownership of the transition to an ABO model rests with the line and no longer with the project team

Timeframe

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10

Define the agenda & come to know each other

Frame the issues & future corporate requirements

Develop organisation implications

Generate organisation options in line with industry best practice

Select the preferred organisation option(1)

Develop the organisational model & blueprint(2)

Develop Phase II work plan

Train and “on-board” the senior team

Bi-Weekly Status Reviews

Workshop Confirm requirements Confirm preferred option Initial Launch (3)

Work Stream

Select individuals for key positions

Communication and program management

Sample of questions that may have to be

addressed during phase I ..


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• Define agenda & come to know each other:- Who are the key individuals that can make or break the OD project ?- How are they positioned today vis-à-vis this project and how can

we forge this group into a “coalition of change” ?- Are there any roadblocks or constraints ?- What in the recent history, the present and the future of the

company is important for this project ?- How should we coordinate the work and communicate with the key

stakeholders in this process ?- What expectations and opinions do the key individuals have and

what is fact versus opinion ?- How will we define success of the new Organization ?- What kind of orientation do the Company team members need in

terms of working on this project ?- Are we all on the same page in understanding the challenges of

achieving successful change ?- Are we addressing the typical threats & issues ?

- How would one describe today’s Company culture – and what are itsunderlying values & issues ?

Typical Questions for Phase I – illustrative & non-exhaustive




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• Frame the issues & future corporate requirements:- What are our needs for the next 5-10 years and what does that

mean at the Corporate, Asset/Business Unit and Service levels ?- What truly drives the value of our business and, therefore, whatdo we have to get right ?

- Where are we behind in terms of current performance , whichprocesses are most broken and how can we fix this ?

- What kind of behaviour do we seek from our lead staff ?• Develop organization implications:- What are the consequences of wanting to bring the company up

to a best-in-class independent, e.g. in project delivery ormaintenance ?

- How does the need to source essential technology – internallyand/or externally - impact our organisation design ?





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• Generate organization options in line with industry bestpractice:

- How do we integrate sub-surface understanding with surface

understanding without loosing the required technical quality inour decision making ?- What are the trade offs and how should we make them, e.g.

speed versus quality, empowerment versus control, centralversus local ?

- How should we compare organisation options ? Which issuesmust be resolved now ?

• Select the preferred organization option:- How should the asset/business unit teams defined and what are

the key interfaces & linkages with other assets ?- How do we ensure that linkages and interfaces are well managed

and that we do not create “empire-building” Asset Barons ?- How do desired behaviours, organisation options and current

company culture fit and to which extent can they be aligned ?





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• Develop the organization model & blueprint:- What are they key asset responsibilities, e.g. related to

production & maintenance, performance, improvement, risk,

people and economics, asset and company level ?- What are the key responsibilities for the technical serviceprovider, e.g. technical excellence & advice, skill development,project delivery, maintenance & improvement projects and thirdparty relationships

- What is the role of corporate ?• Select individuals for key positions:- Who of our best people, given their personality, competence and

potential, are best suited to take on the new lead roles in thenew organization ?

- How will we work with these people during the 16 weektransition

- Do they need help, so they can dedicate themselves to phase II?





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• Train and “on-board” the senior team:- Do we all share the same view on where we are, where we are

going and how we are going to do it ?

- Are we all committed to this journey – now is the time to get offthe train and no later- What are the “must haves” in order for the initial launch to take

place at week 10 – e.g. in terms of controls, integrity, finance ?


Phase I: Deliverables (at 10 week mark)


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1. Definit ion of Future Corporate Requirements

- Company Vision: five years from now, what will we look like ? - what will be distinctive about us ? How

big ?

- Capability requirements to support delivery of Company’s vision including project, production targets

2. Organisation Model

- Documented, thoroughly worked & aligned with Company’s vision- Justified on basis of robust assessment of alternative organisation options

- Supported by the Executive Board

3. Organisation Blueprint - with Key Positions Staffed

- High-Level Organisation Chart, incl. Function/Asset/Business Unit Definition and Responsibilities &

Authority Levels for key positions

- Nominations of Company staff into key positions (in conjunction with key the top management)

- High-level redesign of key processes – including management process

4. Ini tial Launch – focus on top level st ructure

- Training & “on boarding” of the senior Company team completed

- Communications delivered

- Understanding of the major transition issues

5. Phase II Work Plan – with Company driving the change

- “Value Delivery Teams” ready for launch – addressing Phase II priorities & accountabilities

- Well articulated change & implementation plan, including Risk monitoring & mitigation plan

- Communications plan: what, when, how, to whom, by whom – including Case for Change



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Project Objective

Phase I (10 wks)- Main Activities


- Deliverables



- Deliverables

Phase III


Cost

Successful Transformational Change: “ Where to?” & “ How to get there?”

Phase II activities will focus on the detailing of the phase I

blueprint and on crucial change management requirements


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Design:

“ Where do we want to be?”Change Management:

“ How do we get there?”

+ Successful deliveryof the new

organisation

g g

Blueprint of the future

Company organisationTransforming the present organisation

into its new shape

• Detailed Organisation Development

(process, structure, people)

• Enablement – i.e. training, IT, skills/caps.

• Communications & Case for Change

• Business Continuity & Risk Mitigation• Staff Selection, new Organization

Orientation & Training

• Business Involvement & Ownership

• Behaviour Change, M&R, score cards

• Leadership & Change Cascading

• Business Processes &

Systems

• Structure & Roles• Culture & Behaviours

Sample of questions that may have to be addressed during

the organisation detailing of phase II ..


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Corporate:- How do we measure success, e.g. ROACE, ROCE, EVA, Cash, HSE,

Reserve Replacement ?

- How do we plan, budget & forecast ?- How do we manage performance across the company ?- Who manages which relationships / partners ?

Strategy Execution & Delivery:- Who drives growth and reserve replacement / development ?- Who owns “within asset” opportunities – from initial discovery to

production ?

- Who owns the economics of the entire company – and how doesthis link with the function/asset/business unit teams &government regulation constraints ?

Typical Questions for Phase II – illustrative & non-exhaustive





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Service Provision to the Assets/Business Unit/MoneyMaker

- Where do we put which services – technical & non-technical ?- How do we allocate resources to the highest value/most urgent

opportunity ?- Who is accountable for service delivery & how do we manage

demand & cost ?

- How do we ensure that we develop & maintain capabilitiesessential to Company’s success ?- non-tech: how do we run JV reporting & procedures ?- tech: how do we define & ensure access to technical excellence ?

Work Philosophy- What is the role of teams – what can reasonably be achieved &

how does this sit with current company & Indonesian culture ?- How do we align accountability and authority at different levels in

the organisation ?






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Assets / Operations / Money Maker:- Which KPIs: production availability, unit opex, venting, WP, LTIF ?

Developed Reserves against targets ?

- How do we integrate Function/Business Unit/Asset ManagementPlans into the way of doing business in the new organizationmodel ?

- Who owns production plans (short / mid / long term) ?- Who worries about company production performance ?- How do we plan, execute & measure success of maintenance ?- How do we handle emergencies ? Project Delivery- How do we ensure that we spend our capex dollars wisely – which

toll gates, where & how ?- Who maintains work management systems and handles third

party relationships – e.g. who manages contractors – for instancein well delivery ?

- What is our technology & contracting strategy ?- What is our specification strategy ?

Typical Questions for Phase II illustrative & non exhaustive

Crit ical Phase II design considerationsValue Delivery Teams (VDT) Composition

Approach to organisation detailing in phase II builds on the

full power of the organisation through Value Delivery Teams


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Crit ical Phase II design considerations

Value

Delivery

Teams

Led by a trusted L-3

manager 60-100% time

commitment

• Focus on key value delivery areas

• Seek visible and sustained senior

sponsorship

• Strongest skills for most significantopportunities – may have to be full time

• Widespread participation to facilitate buy-

in to solutions; exploit linkages to existing

networks

• Embedded accountability for deliveryincluding link to line via tasks and targets

• VDTs are empowered to act

• Processes, tools and ways of working to

support leverage of lessons learned and

best practices to / from VDT’s in otherregions

• Move people between VDTs in

consecutive phases of the programme to

support knowledge transfer

• Ensure coordination and governanceoutside the direct VDT environment

Sponsored by the

relevant L-2 Manager

(20% time commitment).

Value Delivery Teams (VDT) Composition

Counselled by “focal

point” representative

from P.O.

.

= Permanent member

= stakeholders invited on an “as required basis”

Critical linkages / interfaces driving the

attendance of other (non-permanent)members of the VDT

Full time members of the

VDT drawn from acrossthe business

The full delegation

is able to cover

the entire agenda

At least one member is

drawn from elsewhere in

the business with the

objective of learning

through experience

Phase II: Deliverables


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1. Management Report ing and Governance Model• Performance Management & Metrics agreed

• Compliant with Internal / External Reporting requirements

• Capital Approvals, Authority Levels and Checks & Balances in place

2. Completed Organisation Structure

• Detailed Organisation Chart, including staffing of new organisation

• Business Improvement Position to be created which will take over phase III coordination

3. Processes Redesign & Role Descriptions - mostly finalised

• Production, Development, Operations, Commercial, New Business, Support and Management

• Role descriptions mostly finalised for top 30 - 50 positions across the company

• Clarification of interfaces & hand overs – some work to be done at the most detailed level

4. People Training & Orientation - well on track and probably still ongoing• Top 30 - 50 managers will have undergone training on leadership & change and will understand how the

new organisation works, what remains to be done and how to lead their people – many of this group will

be on Value Delivery Teams and will play a role in educating & training the rest of the organisation

• Orientation Workshops will have been had in each organisation unit, offering all staff an opportunity to

understand what the new organisation will mean for them

5. Key Documents, including:• Capability & Skills Development Plan / Sourcing Plan

• Asset Management Plans

• Hand-Over Document : i.e. Phase III work steps, milestones, dependencies, outputs, requirements,

resource plans, accountabilities

6. Go- Life Event



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Project Objective

Phase I (10 wks)

- Main Activities


- Deliverables



- Deliverables

Phase III


Cost

Phase III: Main points


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Phase III is open-ended and is all about continuousimprovement through “do-learn-do” loops

In developing new organization, Phases I and II have beendeveloped with the objective of enabling Company toassume conversion to a new Organisation Model by end ofPhase II.

To support this final implementation, envisage Companyduring Phase III to

maintain a small organisation unit that is tasked withcontinued implementation

continue coaching of key personnel

maintain program & change management


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CHANGE MANAGEMENT

By Pungki Purnadi

Change Management -

The Change Curve


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B u s i n e s

s

P e r f o r m

a n c e

CurrentState

DesperateValley

Target

Performance

Time

This wil l happen when the change occurs

Change Management -

Optimizing the Change Curve


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Minimisedegree of

disruption

Sustain

Improvement

Minimise

length of

disruptionCurrent

State

Target

Performance

B

u s i n e s s P

e r f o r m a n c e

Time

Change Management is all about ensuring

People Acceptance, Ownership and

Readiness for the change and using the new

system & way of work

DesperateValley

Commitment Curve

S k h ld G X


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Awareness

Understanding

Acceptance

Commitment

Time

Stakeholder Group X

Ownership

Communication


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89

Change flowsdownhill

Change flowsdownhill

Communication rules....” I willlisten and learn when it is toldto me....”

Communication rules....” I willlisten and learn when it is toldto me....”

Face to face

Direct from my supervisor

In terms relative to my

current job

Sponsor Sponsor

TargetTarget

Agent AgentHas been through thechange and can

validate and own the

benefits

Can only be taken

through the change by

a sponsor

Can support the

change



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EFFECTIVE ORGANIZATION & BESTPRACTICES

By Pungki Purnadi

EFFECTIVE ORGANIZATION

INDICATORS


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Achieve the Goals

Profitable, Growing, Innovative

Vision and mission are understood andremembered by the Employees

Employees have high level of Engagement

They will recommend the organization to others

They will become the ambassador of the organization

They will strive for excellence

They will stay with the companies despite attractiveoffers from others

Labor Union becomes Business Partner

HOW TO MEASURE

EFFECTIVENESS ?


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Organization Achievement

Profitability, Growth and Innovation Level Organization Climate Survey

Number of Appeals for Job Evaluation Result Employee Turn Over and Exit Interview Result

Recognition from Others Industrial Relation Issues

Best Practice – Thinking Organization

Se en Ele en the n mbe 1 con enience sto e in the o ld ith an


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Seven Eleven, the number 1 convenience store in the world with anannual sales of US$ 17.6 billion, & sales profit of US$1.3billion, has athorough habit of thinking.

FC MEETING AT SEVEN ELEVEN JAPAN

InputMonday

OutputTuesday

NextMonday

NextTuesday

1 week action

Participantsof FC meeting- OperationField

Counselor(1200)- District OfficeManager (129)

- Zone Manager (14)- Recruit Field Counselor (14)

- Planning Product Development staff

Seven Eleven have conducted the FC meeting

every Tuesday with 1500 participants for 30 years

Shops(9060)

Best Practice – IDEO (USA)


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Characteristic of innovation 0rganization* Studio Management :One unit will not be bigger than 50 employees. Each unit iscalled a studio

* Dual Knowledge Management :

Both hard and soft intellectual assets are shared* Professional Value :

Time charge is measured by professional* Management Committee :

Committees of Studio Leaders make decisions* Incentive :

Venture/Challenging approach is rewarded with commissions* Culture :

Work environment is designed to have fun at work

An Industrial Design company in Silicon Valley, USA, whichexpands upstream function. IDEO has about 500 employees.

Best Practice – IDEO (USA)

IDEO Organization Structure


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CEO

StudioLeader

-Maximum 50 members in one studio-Several teams in the studio-A new studio generated when more members

-12 studios in different butnear locations-Studio Leaders fromManagement committees

Black box in the center ofstudio space “Cool MechanismBox”

•Heat pipe (with hot water,bimetal interesting items•KM Manager maintains thesame black boxes in 12 studios

Design drawings/pictures areshared with Macintosh



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CASE STUDY

By Pungki Purnadi

Case Study (1 :Chemical Company )


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I n t r o d u c t i o n

Advanced Chemical India Corporation (ACI) is founded in 1982 by currentowner & president, Mr.Gupta. ACI’s overall sales turnover in 2002 hitUS$800 million and profit is US$30 million before tax.60% of ACI’s are sold

in domestic market although overseas sales have been growing steadily. ACI originally started producing basic chemical products that are used in

clothes. Gradually other applications are developed such as for automobile,home appliances. Most of customers are companies which buy ACIproducts parts or OEM products putting their brands on it. Also someproducts for homes are sold directly from supermarkets in India with ACIbrand.

They have three plants in India and sales offices in US, UK, Hong Kong.Thailand and Malaysia. All plants produce basic chemicals and modifiedproducts based on needs of clients.

About 2160 employees are hired. Their organization organized byfunctions. There are 160 employees in HQ, 1500 in production withproduction engineering, 400 in sales in various branches, and 100 in R&D.

HQ covers marketing and corporate functions as Finance, IT, Legal,Purchasing, HR etc.. ACI uses patents licensed by UK chemical companies. But by developing

own products for specific clients, some new patents are developed by ACIand registered.

ACI’s corporate philosophy is Keep High Quality in products. The culture ofACI is basically conservative.

Case Study (1 : Chemical Company )


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B u s i n e ss I ss u e s

Global competition around ACI is getting severer. Now for low costproduct, ACI is competing with Chinese companies and for high endproducts competitors are US/European/Japanese chemical companies.

As a result of severe competition, though the sales has increased by 5%,the profit has decreased by 20% last year. Both commodity and specialtychemicals divisions are reducing profits.

Mr. Gupta wants to transform ACI, review its business model and lift ACIinto the next era of growth.

He considered that organizational issues of ACI are followings.

Since many Products introduced, profit control for each product is getting difficult.And the final responsibility of each product is not clear. Functional organization becomes barrier to develop/introduce products in speedy

manner. HQ seems too big. He feels difficulty to manage everything by himself

Therefore he decided to transform ACI from functional to business unit

base organization ( basic chemical and specialty chemical units ). Also hewants to reorganize HQ and R&D to more value oriented organization Currently Job based pay and incentives with profit share (for total ACI

profit) are used. Mr. Gupta also feels the necessity to change theseaccording to the organization change

Case Study (1: Chemical Company)

ACI’S CURRENT ORGANIZATION STRUCTUREFunctional Depart Division


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CEO(Gupta)

Board of directors

HQ

Production

R & D

Sales

Process Engineering

Development

Research

X Plants

Y Plants

Z Plants

US Branch

UK Branch

Thai Branch

Mal Branch

Functional Depart

Planning

Finance & Accounting

Purchasing & Logistic

IT

HR & Labor Relations

Legal &Intellectual Property

Division

Control

Engineering

Production

Division have4-6 management

layers

HK Branch

600

500

1500

400

Case Study 1 – Chemical Company


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Questions

Organization recommended for ACI? Structure & Managing system

People Management

Corporate (HQ) managementsystem recommended?

People management recommended?

Case Study (2: High Tech Trading )


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I n t r o d u c t i o n

Shin Service Corporation (SSC) is a locally incorporated trading firmfounded in 1972 by current owner, Mr. Shin.

SSC’s business niche is in facilitating transactions between suppliers and

customers so that suppliers do not have to manage both manufacturingand selling, whilst SSC’s proximity to customers ensures their needs areanticipated and met promptly.

The corporation’s core trading business are in electronic components, PCand networking components and factory tools. It is also diversified in otherfields including desktop publishing products and medical supplies as well.

Its customers include multinational corporations from industries likeconsumer electronics, telecommunications, semiconductors, automotiveand healthcare.

Globally, they are partnering with more than 500 manufacturing suppliersto meet customers needs.

Apart from Taiwan, SSC’s currently operate in 4 overseas locations – US,UK, Japan, and Hong Kong.

90% of SSC’s sales are from domestic market, although overseas saleshave been growing steadily, with Asia being the fastest growing regionfollowed by Europe and America.

SSC’s overall sales turnover in 2002 was US$300 million with profit ofUS$15 million. 400 employees are hired mostly in Taiwan



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B u s in e ss I ss u e s

In the last 2 years, SSC’s business performance has been belowexpectations as it faces increasingly stiff competition in itsdomestic market and a recessionary global economy.

Overall sales has declined by about 5-10% year on year for thelast 2 years and businesses in all core fields have been adverselyaffected, with domestic market being the worse hit.

The President feels that the current organization structure (seenext slide) impedes business growth and may no longer be

relevant in today’s dynamic business environment. Currently, SSC employs a sales budget control management

system, an user sales turnover figures as the primaryperformance indicator.

Performance is reviewed once a year and incentive awards arediscretionary and determined largely by senior management. In

the last year, staff who left SSC have cited this lack of linkingperformance to rewards as a fundamental retention issue.

The President also wishes to increase sales from overseasmarkets and tap further on viable regions.


SSC’S CURRENT ORGANIZATION STRUCTURE


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ManagerPlanning

SR ManagerProduct Dev

ManagerSales

ManagerCust.Svc

SR ManagerProduction

SR ManagerOrder

ProcessingManager

InventoryManager

ITSR Manager

FinanceManager

Comp & BenManager

PeopleDev

Vice President

Planning & Dev

Vice PresidentSales & Cust.

Service

Vice President

Production & Distribution

Vice President

Human Resources

Sr. VicePresident

Operations

Sr. VicePresident

Finance & Admin

PresidentDirector

Owner

Case Study (2: High Tech Trading)


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Qu e s t i o n s

What is recommended organizationfor SSC? Structure

Process People Management

Transformation plan recommended?

Immediate or graduate change People Treatment