Success studies
The Overall Management Improvement Consulting for an Electrical Power Co. Ltd
The Overall Management Improvement Consulting for an Electrical Power Co. Ltd.
Project Introduction:
Our client is a mid-sized public owned regional electrical power corporation with services including generating, transmitting and supplying electricity, as well as maintenance of the equipment. Company owns 5 power plants, 4 electric substations, 2 sub-divisions, and 1 power management center; 108,500 KW capacities in electrical generation; a regional electrical transmission network for consists of 42.95km of 110kV line, 117.45km of 35kV line, and 2380km of lines under 10kV. In the areas of power supply, it has the capacity of 128,000kVA in power transformation, 28 grid-connected power stations with a capacity of 149,920KW, 12 grid power stations with a capacity of 25,000KW, a yearly generating power of 597,450,000KWH, a yearly power supply of 653,810,000KWH (including internet power supply). Company’s registered net worth is ¥ 65,000,000 RMB, total assets are close to ¥ 1 billion RMB. Company has over 700 mou in size, and a total of 724 employees. In 2004, company’s yearly revenue is ¥ 155,000,000 RMB, net profit after tax is ¥ 52,000,000; and in 2005, with the same revenue of ¥ 155,000,000 RMB, net profit is only ¥ 40,000,000 RMB.
Key problems:
Since the cooperation just went through a series of business model change from a public owned company to a private holding company and back to state-holding enterprise, the company has lost its original cohesiveness when it changed from the public sector to private sector, but when it changed back to being public owned, it lost its strict structural management formed during the time when it’s privately owned. In addition to this, the company lack strategic positioning, a series of reasons combined has caused employees to lose direction. Under the influence of traditional public sector management model, a lot of issues has risen from all aspects of the company, and has become the obstacles for company growth. The key problems are:
1. Lack of strategic positioning. It caused most employees to be unclear on the big direction of the company. In the competitive electrical industry, employees are stressed and unstable.
2. Unstructured management. Because of the unstructured management, many problems arose that needs to be resolved. However, the frequent change of higher management is the direct cause to this problem.
3. Human resource management not up to date. Without strategic planning for the human resources management, it’s hard to get employees motivated and get them focused on their work. There are obvious problems with the basic rules of salary structure and performance evaluation, the old salary structure has been the main complaints of the employees, and it needs to be redesigned according to the current situation of the company. Besides this, the company doesn’t have a performances evaluation system. This increases the feeling of unfairness among employees; it even heavily influenced the enthusiasm of work among different levels. Additionally, the lack of constraints and encouragements from the executive management has limited the growth of the company to reach a higher level.
4. The company's organizational structure needs to be optimized according to the current trend to meet future strategic development needs.
5. Financial management is difficult to achieve, the daily financial management strategies are loose, crisis have gradually arose in the areas of cost control and budget management, etc. Net profit, for example, has declined from ??40 million in 2005 to the estimated??6 million in 2006.
6. The traditional habit of thinking in the state-owned enterprise “No Push No move” has led to the problem, when companies do not have a clear roadmap, employees tend to stay in the same place and not moving forward. Thus it caused difficulty in the advancement process. And not having a full system and structural process increases the difficulty of work.
Solutions:
Truth United consulting group believes that the above problems are resulted from a combination of various issues. Its essence is that under the background of the development of enterprises, the existing management and corporate development stage, does not match the overall quality and level of awareness of employees. So the enterprise-wide management upgrade is imminent.
Truth United consulting group has conducted an intensive 3 months research for the company, which include internal interviews, questionnaires, data collection, research work, problem analysis, panel discussions, interviews and other means of corporate internal and external environment of the comprehensive research. Based on the research, analysis and summary, Truth United consulting group has presented a series of systematic, instructional and actionable solutions:
1. A clear strategy, emphasizing the strategic implementation: Based on clear corporate missions, we put forward a clear strategy for enterprise development, and give enough attention to the strategic implementation of the above measures. The strategies of implementation were carefully designed to ensure the enforceability of the strategies.
2. Creatively improve the corporate governance structure: through full investigation, based on an actual situation of the enterprises, we re-structured the main provisions of the corporate governance structure, clearly defined the responsibilities and authority as well as the proceedings of the corresponding processes of the shareholders' meeting, the Board and the Supervisory Board. We also creatively presented the idea of adding a specialty Committee under the Board and proposed scope of work responsibilities and rights of its program, making a good combination of corporate structural governance and corporate realities, making a strategic fit with the new company.
3. Rational optimization of organizational structure: Under the command of the new strategic plan, through analyzing existing organizational strengths and weaknesses, we re-designed the new organizational structure, ensuring the control of the organization, in division but not in chaos. It also helps the enterprise to carry out duties, improve efficiency, motivate creativity and nurture talent.
4. Construction of strategic human resource management: initiate human resource planning under the strategic influence, form human resource management base around human resource planning, making sure that human resource management can bring great support to the realization of the company's strategy, and base on this form a reasonable compensation system and performance evaluation system. At the same time, taking into account the importance of corporate executives on corporate performance, we designed a separate pay and performance system especially for executives, and a system that establish constraints and incentives for senior executives.
5. The practical realization of the financial management functions: in the preparation of the design process of job functions and job description, systematically give duties and rights of financial management to the job, and design the financial management indicators through performance evaluation program, formed the initial system of assigning individuals functions of financial management and implementation mechanisms. In addition, first time in the history of the enterprise, we introduced a comprehensive budget management framework and implementation schedule, the maneuverability is further assured.
6. Enhance the overall management of teaching business ideas: corporate strategy formulation gives businesses an overall vision, clear departments and job responsibilities make sure detailed tasks of business strategies are assigned to individuals, and pay and performance evaluation system is ensuring each staff member takes thorough reasonable thought to every task, and combined wisdom of all positions also promoted constant improvement of the corporate strategic vision.
7. How to improve the overall management of the enterprise and put it into action: from the company's strategy execution to the process of execution on important tasks, and to the construction of important tasks. Initiate a full system upgrade, but always keep in mind with the overall achievability of the project results. Consistently teaching the business how to act, the completion of the method transmission is also ensuring effective action is taken for the creation of real value for the enterprise.
Importance of Consultation
This consultation is first to give customers an understanding, the understanding of their role, their foundation, the knowledge of internal resources, the knowledge of external environment, understanding of how modern management knowledge would work together with corporate management, and understanding of methods to achieve a better future. Secondly, this consultation changed the ideology of the enterprise, during the constant communication and information exchange, the ideology of business has been changed through project interaction, it is being improved and perfected. Thirdly, the consultation has established a new management model. It unified company values for all employees, and established a reasonable and actionable management system. Fourth, this consultation gives a firm belief to the enterprise. Through project cooperation, companies recognize their self value, and firmly believe that with the help of Truth United combined with enthusiasm and proven track record, the company will achieve greater success.
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2011-2015 Strategic Development Planning for a Large Investment Group in Province A
2011-2015 Strategic Development Planning for a Large Investment Group in Province A
Project Introduction
Province A investment group was founded in June 1988, with the registered capital of 4.197 billion RMB. It has the largest total assets in the provincial State Assets Administration Committee, the most important investment and financing entities and state-owned assets management group. It carries the honorary mission of construction fundraising and participating in the construction of provincial key projects. In 2009, it ranked 403 in the top 500 Chinese enterprises, advanced from 2008 for 70 places.
Since the Group was established, it actively played a leading role in industrial layouts, project selections, raising funds for constructions, participations in key projects, fulfilling social responsibilities. It participated in more than 40 key projects in the fields of energy, non-ferrous metals, transportation, chemical industry, light manufacturing, etc. All greatly contributed to the local economic and social development.
By the end of 2008, electric power, aluminum manufacturing and stock market are major focuses of the investment group, respectively accounts 35%, 26% and 31% of company’s total assets. It has installed capacity of 6,025,000 kilowatts of electricity interests, is the largest local power company in Guangxi province. It’s alumina, electrolytic aluminum production capacity accounted for 32% and 53% of the Guangxi province alumina, aluminum total capacity, respectively, is Guangxi's largest aluminum production company.
By the end of 2008, it has invested in 38 companies with full or partial share options, 15 of which are electric power companies, 6 aluminum and non-ferrous production companies, 4 banks, stock companies, and listed companies, 13 fertilizer, paper production and other companies, 10,000 workers in total.
Key Problems:
Province A Investment Group experienced rapid growth during the “11th 5 year” period. But with the changes in the external environment and intense competition in the market, Province A Investment Group is facing increasingly complex operating environment, and increasing difficulties in operation. It mainly exhibited the following problems:
1. Strategic biased. It only focused on the "quantity" planning, lack of "strategy" planning and competitive orientation. It mainly shows in the goals established for sales and total assets, the goals are established, but how to achieve these goals, there is no specific strategic planning.
2. Corporate strategic planning only exists in the written report, and the strategy stays in slogans, not fully carried out. Although mentioned the entering of the real estate industry and gaining control over the upstream coal resources, but neither was put into practice.
3. Strategy formulation procedures and processes are not standardized, the relevant units and departments did not fully participate in and discussion, causing the improper implementation of the strategy, or the unsatisfactory implementation.
4. It’s difficult for the Group’s strategic plan to get strong support from the higher management, and there is no specific plan of action, also lack of factual basis for strategic planning objectives. The market forecast for the related industries need to be strengthened, and there should be more detailed data support for it.
5. Some supporting functions of the strategy is missing, lack of the marketing strategy and branding strategy to ensure an overall implementation of the corporate strategies, and lack of strategic support. The market positioning and competitive strategy is not clear.
6. Lack of monitoring efforts on implementing the strategy, the strategic implementation of performance evaluation is not in place.
7. Publicity for group strategy is not strong enough, resulting in lack of attention for strategy implementation within the company, and the role of strategic management is difficult to play.
8. During the "12th 5-year" period, how to once again achieve leapfrog development for the company? How to accomplish the related business objectives? How to develop our leading industries such as non-ferrous metals, energy, finance, real estate, and fertilizer and chemical industries etc? How to choose to enter the opportune industry? What are the opportune industries? How to manage the project that we invested in? How to develop recycling economy and area based economy? These have become a major issue for Province A Investment Group from new historical view. In this case, to develop a practical strategy is especially important. Through the development of a new strategic plan, we will make the Group achieve a new growth during the "12th 5-Year" period.
Solutions:
1. Based on the research through both the company headquarter and subdivisions in different provinces and regions, in-depth interview and questionnaire, analyze the problems the company is facing in organizational management, including the strengths and weaknesses of the company and opportunities and challenges from the external environment.
2. Extensive research collection and in-depth analysis of the relevant government industrial policy (aluminum, electricity, banking, chemicals, real estate, cement, coal, chemicals, paper, coal, etc.), macroeconomic conditions, industry operating conditions, regional economic policies and industrial revitalization plan, the regional economy run data, etc. At the same time, base on industry research previously conducted by Truth United Management Consulting, we help the group to gain a systematic, comprehensive and objective understanding of the existing industry and the opportune industry.
3. For the industry the company is in, Truth United Consulting team selected two leading representatives of the industry for enterprise operations - State Development and Investment Group and Nanshan Aluminum Group, conducted in-depth analysis to understand the key factors for its success and profit sources, and to use this as a standard operation performance measure for the company.
4. Base on the external environment analysis and business models analysis, the project team and the management group conducted several in-depth discussions, jointly determined: the mission, vision, values and strategic positioning of the Investment Group's business location, regional positioning; Group's overall strategic planning, the overall goal planning, and new economic growth point plan during the "12th 5-year" period; Group cycle of economic planning, area based economic planning and production financing planning.
5. Combined with the "11th 5-Year" Strategic Management Review and industry key success factors, Truth United Consulting Group developed a 2011-2015 strategic support system for the Province A Investment Group, including the company's management model and organizational optimization, human resources planning, information systems planning, and group’s sub-company performance evaluation program.
Meaning of the consultation
Province A Investment Group, as a large state-owned investment group, in the actual operation during the "11th 5-Year" period, exposed problems with the future direction and grasping the new economic growth point. After 1 year of consulting since 2009 on the development strategy planning for the "12th 5-year" period, the company not only got a deep understanding of the "11th 5-Year" Strategic planning and management practices, but also have a clear outlook and planning for the "12th 5-year " period strategic development, strategic positioning and strategy implementation target path. Since then, under the guidance of strategic thinking, Province A Investment Group has improved their ranking significantly in the China top 500 companies, it ranked 343 in 2010, advanced from 2009 for 60 places.
All rights are reserved by Beijing Truth Management Consulting Co., Ltd. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher.