McKinsey 7S Framework is most often used as an organizational analysis tool to assess and monitor changes in the internal situation of an organization. The model is based on the theory that, for an organization to perform well, seven elements need to be aligned and mutually reinforcing.
McKinsey 7S Framework is most often used as an organizational analysis tool to assess and monitor changes in the internal situation of an organization. The model is based on the theory that, for an organization to perform well, following seven elements need to be aligned and mutually reinforcing:
A set of actions that the company starts with and which it must maintain. Strategy is the manner in which the organization derives, articulates, communicates and implements it's vision and direction. Strategy is the purpose of the business and the way the organization seeks to enhance its competitive positioning and competitive advantage.
Strategic thinking involves the understanding of basic economics of business; identifying one’s sources of competitive advantage, and allocating resources to ensure that ones distinctive capabilities remain strong.
Structure defines how people, tasks, work is organized and represents the way business divisions and units are organized and includes the information of who is accountable to whom. In other words, structure is the organizational chart of the firm. It is also one of the most visible and easy to change elements of the framework. Structure allow the firm to focus on areas that are deemed important for its evolution. This includes division of activities; integration and coordination mechanisms. Functional superiority can only be achieved if there is enough reliability and focus within each business unit.
Systems refer to policies and procedures that govern the way in which the organization acts within itself and its external environment. These processes and information flows link the organization together and used by staff to get the work done. This includes computer systems, operational systems, HR systems, etc., which reveal business’ daily activities and how decisions are made. Systems do not only refer to hard copy reports and procedures but also to
informal mechanisms such as meetings and conflict management routines.
Style represents the way the company is managed by top-level managers, how they interact, what actions do they take and their symbolic value. How managers behave, leadership style, unwritten norms of behavior and organizational culture etc.
This element is concerned with how the company develops managers (current and future) and employees. Their selection, training, reward and recognition, retention, motivation and assignment to work etc. Identifying what type and how many employees an organization will need and how they will be recruited, trained and deployed.
These values define the firm's key beliefs and aspirations that form the core of its corporate culture. These values shapes the organizational culture as the employees share the same goals guiding values. Values act as an organization's conscience, providing guidance in times of crisis and are the foundation of every organization.
Values are intangibles that affects employees (treating them with dignity), customers (treating them with fairness) and society (making a social contribution).
Dominant attributes, competence or capabilities that exist in the organization. It refers to the fact that employees have the skills necessary to execute company’s strategy. Skills enables its employees to achieve its objectives.
Organization is a system of consciously coordinated activities of two or more persons in order to achieve a common goal. As per the model these seven internal aspects of an organization need to be aligned if it is to be successful. The 7Ss framework provides a useful framework for analyzing the strategic attributes of an organization. Whatever the type of change – restructuring, new processes, organizational merger, new systems, change of leadership, and so on – the model can be used to understand how the organizational elements are interrelated, and to ensure that the wider impact of changes made in one area is taken into consideration. The model can be applied to many situations and is a valuable tool when organizational design is at question.
The most common uses of the framework are:
Organizational structure aligns and relates parts of an organization, so it can achieve its maximum performance.
Organizational structure sets out who does what within a company and specifies who answers to whom.
A strategic, carefully planned organizational structure helps a business run effectively and efficiently.
It helps determine how your products are produced, distributed, marketed and sold.
Structure is also dependent on your company’s unique mission and goals.
Regardless of the type of structure you choose, you’ll find key elements that they all have in common.
One of the most important components of your organizational structure is defining who’s in charge.
It’s important that you have a clear defined chain of command.
How and where your products or services are produced is also considered within your business structure.
An organization’s structure also maps out how products are delivered to customers.
Each of these elements affects how workers engage with each other, management and their jobs in order to achieve the employer’s goals.
Defining Organizational Hierarchies
A hierarchy is an ordered series of related objects. You can relate hierarchy with “pyramid” - where each step of the pyramid is subordinate to the one above it. One can use drill up or down to perform multi-dimensional analysis with a hierarchy. Multi-dimensional analysis uses dimension objects organized in a meaningful order and allows users to observe data from various viewpoints.
Global Business Services (GBS) Model
Global business services (GBS) is an integrated, scalable, and mature version of the shared services model. Global Business Services Model is a result of shared services maturing and evolving on a global scale. It is represented by the growth and maturity of the Shared services to better service the global corporations they support.
Divisional Organizational Structures
The divisional structure or product structure consists of self-contained divisions. A division is a collection of functions which produce a product. It also utilizes a plan to compete and operate as a separate business or profit center. Divisional structure is based on external or internal parameters like product /customer segment/ geographical location etc.
In this article, we will explain the general Ledger journal processing flow from entering journals to running the final financial reports. Understand the generic general ledger process flow as it happens in automated ERP systems. The accounting cycle explains the flow of converting raw accounting data to financial information whereas general ledger process flow explains how journals flow in the system.
Multitude of these legal and operational structures clubbed with accounting and reporting needs give rise to many reporting dimensions at which the organization may want to track or report its operational metrics and financial results. This is where business dimensions play a vital role.
An account inquiry is a review of any type of financial account, whether it be a depository account or a credit account. In this tutorial, you learn what we mean by drill through functionality in the context of the general ledger system. We will explain the concept of drill-down and how it enables users to perform account and transaction inquiry at a granular level and the benefits of using this functionality.
In this article we will focus on and understand the accounting process which enables the accounting system to provide the necessary information to business stakeholders. We will deep dive into each of the steps of accounting and will understand how to identify accounting transactions and the process for recording accounting information and transactions.
Network Organizational Structures
The newest, and most divergent, team structure is commonly known as a Network Structure (also called "lean" structure) has central, core functions that operate the strategic business. It outsources or subcontracts non-core functions. When an organization needs to control other organizations or agencies whose participation is essential to the success, a network structure is organized.
Prepayments and Prepaid Expenses
Prepayments are the payment of a bill, operating expense, or non-operating expense that settle an account before it becomes due. Learn the concept of prepaid expenses. Understand the accounting treatment for prepaid expenses. Understand the concept by looking at some practical examples and finally learn the adjusting entry for these expenses.
An allocation is a process of shifting overhead costs to cost objects, using a rational basis of allotment. Understand what is the meaning of allocation in the accounting context and how defining mass allocations simplifies the process of allocating overheads to various accounting segments. Explore types of allocations and see some practical examples of mass allocations in real business situations.
© 2023 TechnoFunc, All Rights Reserved