10 techno structural interventions

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DownsizingThreat or Opportunity : 

DownsizingThreat or Opportunity

Definition : 

Definition Downsizing is the management procedure, which reduces the number of employees in a specific company.

Introduction : 

Introduction The organizations apply downsizing techniques by cutting down the expenses and increasing employee layoffs.

Slide 4: 

It accomplishes decreasing the number of employees by layoffs, attrition, early retirement, outsourcing.

Application stages : 

Application stages Clarify the organization's strategy Assess downsizing options & make relevant choices Implement the changes Address the needs of the survivors & those who leave Follow through with growth plans

Downsizing - Important : 

Downsizing - Important Make no mistake: downsizing is extremely difficult. It demands all of a management team's resources. No one looks forward to downsizing.

Main Advantages : 

Main Advantages There are some advantages when applying the downsizing: Decrease of the labor costs. Department reengineering. Expenses reduction.

Applying Downsizing : 

Applying Downsizing There are many factors that involves the downsizing: How much notice they will be given. The amount of severance pay. How far the company will go to help the laid-off employee find another job. How to deal with the remaining employees.

Three Downsizing Tactics : 

Three Downsizing Tactics

Downsides : 

Downsides Companies can lose critical knowledge they didn't know they had. Employees are feeling the stress of the enormous changes in the company. Corporate downsizing is bad for society as a whole. High labor cost (firing people). Decrease company morale.

Outsourcing : 


Slide 12: 

Outsourcing is subcontracting a service, such as product design or manufacturing, to a third-party company

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Outsourcing involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider. The client organization and the supplier enter into a contractual agreement that defines the transferred services.

Reasons for outsourcing : 

Reasons for outsourcing Cost savings. The lowering of the overall cost of the service to the business. This will involve reducing the scope, defining quality levels, re-pricing, re-negotiation, cost re-structuring. Access to lower cost economies through off shoring called "labor arbitrage" generated by the wage gap between industrialized and developing nations. Focus on Core Business. Resources (for example investment, people, infrastructure) are focused on developing the core business. For example often organizations outsource their IT support to specialized IT services companies. Cost restructuring. Operating leverage is a measure that compares fixed costs to variable costs. Outsourcing changes the balance of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable.

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Improve quality. Achieve a step change in quality through contracting out the service with a new service level agreement. Knowledge. Access to intellectual property and wider experience and knowledge. Contract. Services will be provided to a legally binding contract with financial penalties and legal redress. This is not the case with internal services. Operational expertise. Access to operational best practice that would be too difficult or time consuming to develop in-house. Access to talent. Access to a larger talent pool and a sustainable source of skills, in particular in science and engineering

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Capacity management. An improved method of capacity management of services and technology where the risk in providing the excess capacity is borne by the supplier. Catalyst for change. An organization can use an outsourcing agreement as a catalyst for major step change that can not be achieved alone. The outsourcer becomes a in the process. Enhance capacity for innovation. Companies increasingly use external knowledge service providers to supplement limited in-house capacity for product innovation.[ Reduce time to market. The acceleration of the development or production of a product through the additional capability brought by the supplier.

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Commodification. The trend of standardizing business processes, IT Services, and application services which enable to buy at the right price, allows businesses access to services which were only available to large corporations. Risk management. An approach to risk management for some types of risks is to partner with an outsourcer who is better able to provide the mitigation. Venture Capital. Some countries match government funds venture capital with private venture capital for startups that start businesses in their country. Tax Benefit. Countries offer tax incentives to move manufacturing operations to counter high corporate taxes within another country.

Balance Scorecard : 

Balance Scorecard

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PERFORMANCE MEASUREMENT SYSTEM FINANCIAL MEASURES Cash flow statement ROE Quarterly Sales Report Financial Statement NON-FINANCIAL MEASURES Absenteeism Turn Over Rate Staff Education Customer satisfaction On time delivery Cycle Time


PRESPECTIVES Financial Perspective Internal Service Process Perspective Customer Relations Perspective Learning, Innovation, and Growth Monthly budget variance Replacement cost (loss rate) Repair & Maintenance costs Turn Around time Laboratory Occurrences- specimen processing, safety Repeat tests Workload units System/Equipment downtime Customer satisfaction Customer wait times Laboratory Occurrences- corrected reports Turnover rate (% of staff in 6 months) Absenteeism rate (% of staff in 3 months) Attendance at in-services (% attending) Staff education (% of budget devoted)

BSC : 

BSC The BSC is a conceptual framework for translating an organization's vision into a set of performance indicators/measures distributed among four perspectives: Financial, Customer, Internal Business Processes, and Learning and Growth.



1.It is used as a strategic management system: : 

1.It is used as a strategic management system: Desired state Differentiating activities What must be done well to implement strategies How strategic success is measured Mission Vision Strategy/Goals Objectives In each perspective Measures In each perspective

2.It covers 4 important perspective: : 

2.It covers 4 important perspective: Perspectives Financial Customer Internal Business Innovation and Learning Key Issues Is the company attractive to shareholders? Does the co. provide value to customer? What must co. excel at? Is the co. improving and innovating continually.


MEASURES A measurement tool, which is used as a guide to monitor, assess and improve the quality of 4 perspectives.


FINANCIAL PRESPECTIVES GOAL Survive Succeed Prosper MEASURES Cash flow Quarterly sales growth and operating income by division. Increased market share and ROE


CUSTOMER PRESPECTIVE GOAL New products Responsive supply Preferred suppliers Customer satisfaction MEASURES % of sales from new products %of sales from proprietary products On time delivery Share of key accounts purchases Ranking by key accounts New product development After sales services


INTERNAL BUSINESS PERSPECTIVE GOAL Technology capability Manufacturing excellence Design productivity New product introduction. MEASURES Manufacturing geometry vs. competition. Cycle time/unit cost yield. Engineering efficiency Actual introduction schedule vs. plan


INNOVATION AND LEARNING GOAL Technological leadership Manufacturing learning Product focus Time to market MEASURES Time to develop next generation. Process time to maturity. % of products that equals 80% sales. New product introduction.

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ROCE Customer Loyalty On time Delivery Process Quality Process Cycle Time Employee Skills Financial Customer Internal/ Business Process Learning and Growth 3.It represent linked series of objectives and measures:


ADVANTAGES Focuses on measures that are critical. Presented in simple management report. Guards company against sub-optimization.


PITFALLS Establishing reliable cause effect relationship is very difficult. Managers are accustomed with the financial result. Measurement overload for managers. It is difficult to establish weight to every measure.

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