BANKING ASSIGNMENT

McKinsey's 7S Model & The 7- S’s in

ICICI Prudential

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NEETHU.K.A
0921254
McKinsey's 7S Model
was created by the consulting company McKinsey and Company in the early 1980s. Since
then it has been widely used by practitioners and academics alike in analysing hundreds of
organisations. The paper explains each of the seven components of the model and the links
between them. It also includes practical guidance and advice for the students to analyse
organisations using this model. The McKinsey 7S model was named after a consulting
company, McKinsey and Company, which has conducted applied research in business and
industry, All of the authors worked as consultants at McKinsey and Company; in the 1980s,
they used the model to analyse over 70 large organisations. The McKinsey 7S Framework
was created as a recognisable and easily remembered model in business. The seven variables,
which the authors term "levers", all begin with the letter "S":

These seven variables include structure, strategy, systems, skills, style, staff and shared
values. Structure is defined as the skeleton of the organisation or the organisational chart. The
authors describe strategy as the plan or course of action in allocating resources to achieve
identified goals over time. The systems are the routine processes and procedures followed
within the organisation. Staff are described in terms of personnel categories within the
organisation (e.g. engineers), whereas the skills variable refers to the capabilities of the staff
within the organisation as a whole. The way in which key managers behave in achieving
organisational goals is considered to be the style variable; this variable is thought to
encompass the cultural style of the organisation. The shared values variable, originally
termed superordinate goals, refers to the significant meanings or guiding concepts that
organisational members share (Peters and Waterman, 1982).

The shape of the model was also designed to illustrate the interdependency of the variables.
This is illustrated by the model also being termed as the "Managerial Molecule". While the
authors thought that other variables existed within complex organisations, the variables
represented in the model were considered to be of crucial importance to managers and
practitioners .
The analysis of several organisations using the model revealed that American companies tend
to focus on those variables which they feel they can change (e.g. structure, strategy and
systems) while neglecting the other variables. These other variables (e.g. skills, style, staff
and shared values) are considered to be "soft" variables. Japanese and a few excellent
American companies are reportedly successful at linking their structure, strategy and systems
with the soft variables. The authors have concluded that a company cannot merely change
one or two variables to change the whole organisation.

For long-term benefit, they feel that the variables should be changed to become more
congruent as a system. The external environment is not mentioned in the McKinsey 7S
Framework, although the authors do acknowledge that other variables exist and that they
depict only the most crucial variables in the model. While alluded to in their discussion of the
model, the notion of performance or effectiveness is not made explicit in the model.

Description of 7 Ss
Strategy: Strategy is the plan of action an organisation prepares in response to, or
anticipation of, changes in its external environment. Strategy is differentiated by tactics or
operational actions by its nature of being premeditated, well thought through and often
practically rehearsed. It deals with essentially three questions where the organisation is at this
moment in time, 2) where the organisation wants to be in a particular length of time and 3)
how to get there. Thus, strategy is designed to transform the firm from the present position to
the new position described by objectives, subject to constraints of the capabilities or the
potential.

Structure: Business needs to be organised in a specific form of shape that is generally

referred to as organisational structure. Organisations are structured in a variety of ways,
dependent on their objectives and culture. The structure of the company often dictates the
way it operates and performs. Traditionally, the businesses have been structured in a
hierarchical way with several divisions and departments, each responsible for a specific task
such as human resources management, production or marketing. Many layers of management
controlled the operations, with each answerable to the upper layer of management. Although
this is still the most widely used organisational structure, the recent trend is increasingly
towards a flat structure where the work is done in teams of specialists rather than fixed
departments. The idea is to make the organisation more flexible and devolve the power by
empowering the employees and eliminate the middle management layers .

Systems: Every organisation has some systems or internal processes to support and
implement the strategy and run day-to-day affairs. For example, a company may follow a
particular process for recruitment. These processes are normally strictly followed and are
designed to achieve maximum effectiveness. Traditionally the organisations have been
following a bureaucratic-style process model where most decisions are taken at the higher
management level and there are various and sometimes unnecessary requirements for a
specific decision (e.g. procurement of daily use goods) to be taken. Increasingly, the
organisations are simplifying and modernising their process by innovation and use of new
technology to make the decision-making process quicker. Special emphasis is on the
customers with the intention to make the processes that involve customers as user friendly as
possible.

Style/Culture: All organisations have their own distinct culture and management style. It
includes the dominant values, beliefs and norms which develop over time and become
relatively enduring features of the organisational life. It also entails the way managers interact
with the employees and the way they spend their time. The businesses have traditionally been
influenced by the military style of management and culture where strict adherence to the
upper management and procedures was expected from the lower-rank employees. However,
there have been extensive efforts in the past couple of decades to change to culture to a more
open, innovative and friendly environment with fewer hierarchies and smaller chain of
command. Culture remains an important consideration in the implementation of any strategy
in the organisation

Staff: Organisations are made up of humans and it's the people who make the real difference
to the success of the organisation in the increasingly knowledge-based society. The
importance of human resources has thus got the central position in the strategy of the
organisation, away from the traditional model of capital and land. All leading organisations
such as IBM, Microsoft, Cisco, etc put extraordinary emphasis on hiring the best staff,
providing them with rigorous training and mentoring support, and pushing their staff to limits
in achieving professional excellence, and this forms the basis of these organisations' strategy
and competitive advantage over their competitors. It is also important for the organisation to
instil confidence among the employees about their future in the organisation and future career
growth as an incentive for hard work

Shared Values/Super ordinate Goals: All members of the organisation share some common
fundamental ideas or guiding concepts around which the business is built. This may be to
make money or to achieve excellence in a particular field. These values and common goals
keep the employees working towards a common destination as a coherent team and are
important to keep the team spirit alive. The organisations with weak values and common
goals often find their employees following their own personal goals that may be different or
even in conflict with those of the organisation or their fellow colleagues.
ICICI Prudential Life has one of the largest distribution networks amongst private
life insurers in India. It has a strong presence across India with over 954 branches in
addition to 1,015 micro-offices and an advisor base of over 296,000

The company has 21 bank assurance partners having tie-ups with ICICI Bank, Bank
of India, Federal Bank, South Indian Bank, Shamrao Vitthal Co-Op Bank, Jalgaon
Peoples Co-op Bank, Ernakulam District Co-op Bank, Idukki District Co-op Bank,
Ratnagiri Sindhudurg Gramin Bank, Solapur Gramin Bank, Wainganga Kshetriya
Gramin Bank, Aryawart Gramin Bank, Jharkhand Gramin Bank, Narmada Malwa
Gramin Bank, Baitarani Gramya Bank, Ratnagiri District Central Co-op Bank, Seva
Vikas Co-op Bank, Sangli Urban Co-Operative Bank, Baramati Co-operative Bank,
Ballia Kshetriya Co-Operative Bank, The Haryana State Co-Operative Bank and
Imphal Urban Cooperative Bank Ltd

The 7- S’s in ICICI Prudential

Shared Values: This variable is the central core of the model and is interconnected
with all the other variables. This implies that it is the linchpin of the managerial excellence.
Shared values refer to a set of values and aspirations that go beyond the
conventional formal statement of corporate objectives.
These represent the fundamental values around which a business is built. They lay
down the foundation of the organization’s management philosophy and give rise to a
particular culture.

ICICI Prudential is an organization that values and safeguards basic principles and
core ethics that ranges from Equal prospects, Responsibility to society, Appreciating
values, Openness, Integrity and Total team work
Strategy: A strategy is a long-term plan chosen deliberately and consciously after a
thorough analysis of the internal and external environment of the organization. It
refers to the plan formulated in response to or in anticipation of changes in
environment. It seeks to improve the company’s competitive position. It is designed
to provide guidance and direction to the operations of the organization. It is true that
organizations, which continuously carry out strategic planning and strategic
management; tend to outperform those, which do not.
ICICI Prudential, inspite of being incepted in a competitive environment at Mumbai,
has achieved the best monthly sales volume throughout the periods.

Structure: The structure is the skeleton of the whole organizational edifice. It is

built by dividing the total task into smaller groups and creating coordination among
the groups. It prescribes the formal relationships among various positions and
activities.
ICICI Prudential has designed its organization to comprise of departments such as
Finance & Administration, Sales, Service and IT. F&A and IT departments have
their functions to spread over the others in the structure

System: System refers to all the rules, regulations and procedures; both formal and
informal that compliments the organization structure. It consists of planning and control
systems, capital budgeting systems, cost accounting procedures, training and development
systems, performance evaluation systems etc. Systems reflect the logic
and experience of the past.
The training and development systems, performance evaluation systems and other
systems in the organization meet the best in the industry.

Styles: The style of an organization becomes evident from the pattern of actions
taken by top management over a period of time and the reporting relationship. It is
reflected in the traditions, norms, rituals and actions of an organization.
ICICI Prudential follows an entrepreneurial, innovative and centralized style of
management.
Staff: Staffing refers to selecting people for specific organizational positions and
developing in them, the competence for effective performance. The human resources
shall be managed in such a way to generate a belief amongst them that they are the
real performers.

ICICI Prudential does concentrate in managing the people in the organization. The
compensation packages and the career development prospects are meeting the best
in the industry.

Skill: The dominant skills or the distinctive competence of an organization is a major

factor driving to success. What is required is the ability to identify and utilize
effectively the distinctive skills. Learning new skills and sharpening the existing
skills is equally important.

ICICI Prudential does have a distinctive and somewhat unique marketing skill. The
group as a whole itself is well known in the marketing of quality products and
services. The expertise and allied knowledge is applied towards the future plans of
diversification of the organization