McKinsey’s 7-S Framework identified seven independent organizational factors that are needed to be managed by today’s managers.
1. Strategy to determine allocation of scarce resource and commit organization to specific course of action
2. Structure to determine number of levels (in hierarchy) and authority centers
3. Systems to determine organizational process, procedures, reports and routines
4. Staff to determine key human resource groups in organization and describe them demographically
5. Style to determine the manner in which managers should behave in achieving organizational goals
6. Super ordinate goals (shared vision) to determine the guiding concepts that an organization has to instill in its members
7. Skill to determine the abilities of people in an organization 7-S Framework suggests that any change in any S factor may result to the adjustment of other S factors. Now, however, the concept of 8-S has been introduced, which add one more S to McKinsey’s 7-S Framework, i.e., Streaming. Streaming includes those areas which either indirectly or directly influence or shape the other Ss.
Peters and Waterman (1982) in their pioneering work, In search of Excellence identified some common characteristics of excellent organizations. Such characteristics have now become important management principles.
i. A Bias for Action — Excellent firms make things happen
ii. Closeness to the Customer — These firms know their customers and their needs
iii. Autonomy and Entrepreneurship — They value these qualities in each employee
iv. Productivity — They trust employees to achieve this
v. Hands-on, Value-Driven Management —They make it mandatory
vi. Stick to the knitting — They always deal from strength
vii. Simple Form of Lean Staff — They develop cost effective work teams.
viii. Simultaneous Loose-Tight Properties — They decentralize many decisions, retaining, however, tight control
Global competition has also accentuated the need for enhancing quality and productivity. These two are the basic requirements to retain the competitive advantage for any organization. Hence, management practices should focus on these by developing human resources to sustain their competitive advantage.