Organisational Excellence


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Organisational Excellence

  1. 1. ORGANIZATIONAL EXCELLENCE Excellence entails surpassing or outstanding achievement. Leadership and organizational excellence are inextricably linked. Leadership is doing the right things. Organizational excellence is doing the right things right. In an excellent organization, the many functional parts work together to achieve a central mission while continuing to grow and evolve in order to meet new challenges. Excellent organizations have a vision, streamlined business practices, integrated information sharing, great resilience, motivated workforces, a distinct and positive culture and high levels of performance. - Following are the types of excellence that exist (or may co-exist) in organizations: Competetive organizational excellence Rejuvenatory organizational excellence Institutional organizational excellence Creative organizational excellence Missionary organizational excellence Versatile organizational excellence INSTITUTIONALISED ORGANIZATIONAL EXCELLENCE Institutional excellence is a sustainable competitive advantage that enables the business to survive against competition over a long period of time. It involves sustaining high achievement on importatnt performance parameters even when there is little pressure , by way of competition , for excellence. Competitive pressures in the domains of many Third World societies are relatively weak. Government dominance often threatens to politicise and bureaucratise the larger organizations, especially those dependent on the government for funds or owned by it. If the organization internalises norms of excellent functioning, it may continue to function well despite weak competitive pressures and an adverse control environment. Of course, even for successful institution building, organizational leadership during the formative years of the organization is needed that makes the right choices of what missions to pursue and how. National Thermal Power Corporation of India offers of good example of how institutionalized excellence can be achieved. NTPC was set up in the mid-seventies by the Government of India to speed up the generation of thermal power in the country. Between 1982 and 1990, NTPC increased its power generating capacity nearly ten times, and accounted for nearly half the increase in thermal power generation in India during 1985-90. Throughout the eighties NTPC was profitable, and indeed its profits in 1989-90 were over 100 times its profits in 1982-83, From 1983-84 onwards , NTPC consistently earned more than 25% on sales. In comparison, most of the electricity boards owned by various state or or provincial governments in India made loses during the eighties. In 1988-89 they lost Rs. 32 billion on sales of Rs. 128 billion while NTPC earned Rs. 33 billion on sales of Rs. 12.6 billion in that year. As is evident , the key word for institutionalized organizational excellence is long term sustainability- a player for a longer race , rather than current expediencies. Following is a case analysis of Bajaj Auto Limited , which was the undisputed market leader of the fast growing 2wheeler and 3-wheeler industry in India:
  2. 2. Bajaj Auto Limited Case Facts             Institutionalized Excellence- A direct result of Strategy, Structure and Culture followed in an organisation: In the case given there is clear delegation of authority for making operation related decisions and the head of the company only retains firm control over corporate policy making. Thus the decision making is decentralized to a large extent. This autonomy has helped create an organisation where employees are motivated and spurred by excellence. Bajaj Auto also gives huge importance to innovation strategy and has independently developed 3 wheelers, motorcycles and new scooter models and various other process innovations. From being an importer to technology they have strengthened their R&D to an extent that they are exporting technology to Indonesian and Bangladeshi firms. The culture of the firm is one of ethical and social responsibility. The company has contributed to rural development in Maharashtra. This helps in increased commitment from the staff to a vision of excellence and a concern with suatainable growth rather than short term profit. The company culture focusses on quality which is achieved by manufacturing excellence through innovation, automation and computerisation. The organisation is a young one focussing on meritocracy rather than gerontocracy. The average age of the 32 highest paid executives is only 53. Further there is a healthy balance between at the top between fresh blood and people familiar with the organisation and its culture. The chief executive, in the organisation since 20 years has inculcated good management practices ensuring consistent performance by Bajaj Auto. The strategy has also had a clear strategy which is to achieve sales of a million annually in the early nineties. A clearly defined goal gives the head clarity to define roles and jobs more clearly and drive performance. Institutionalized Excellence- Other prerequisites Bajaj auto has had the benefit of working in technical collaboration with Piaggio thus learning best practices from the Italian firm. Environmental factors such as the increase in industry average wages have also helped Bajaj Auto create a legacy of excellence. The company has restricted its diversification only to 2 and 3 wheeler categories thus helping it focussing fully on them and achieving rapid production capacity expansion. The company has managed to remain financially strong and has given an excellent return to its shareholders thus allowing it to invest in new technologies and innovations. The company also has an extensive dealer network that allows it to enjoy healthy growth and introduce new products to the market in a fast and efficient manner. TATA Group Institutionalised Organisational Excellence has been embedded in Tata through processes and methodologies that enable Tata companies to continually improve operations and achieve the world-class marquee. They are known not only for their continuous achievements in the business sector, but also for their integrity and values. The Tata group’s brand value is ever increasing, along with its diverse market share – achieved mainly because of the wide parameters that the group focuses on. The group has a high focus, not only on financial profits, but also has a wide commitment to their people, and the community – the implementation of which has kept its promise of a true
  3. 3. triple bottom line that appeals to all parties involved in their group of companies – the employees, the shareholders and the customers. Below are the ways in which the TATA group has achieved excellence through a long spanning career.     o o o o o o o o o o o  o  o o o o o o o o  o o o o o Sustained high achievement over a long period of time Founded in 1868 Has celebrated over a 140 years of successful existence, with a distinguished track record. Exceptional achievements notched up by the company at all times, and well ahead of its time. Pioneering initiatives in India Established the first steel plant Introduced labour welfare benefits long before they were enacted by law Started the first power plant Pioneered civil aviation Brought insurance to the country Started the country’s first chain of luxury hotels Led commercial vehicle production Pioneered software development Manufactured the country’s first indigenous passenger car, the Indica Provided affordable, innovative and inclusive solutions such as the Tata Nano, Tata Swach water purifier and Shubha Griha housing Since its inception, the Tata Group has changed its identity from a dominant domestic player, to a regional player, to an upcoming Global company, to having it’s companies in the list of the esteemed Fortune 500. Its operations covers many fields related to industry and allied activities concerned with know-how and its application engineering, information technology, communications, materials, automotive, chemicals energy, telecommunications, software, hotels, steel and consumer goods. The statistics and figures of Tata Group speak for themselves. Group Revenues $100.09 billion (around Rs475,721 crore). This is equal to over 3% of India’s GDP. Shareholder base: 3.8 Million Over 100 operating companies International presence in over 80 countries International revenues: $51.5 Billion There are about 450.000 employees in the Tata group. Tata motors and Tata Communications listed on NYSE It exports products and services to one hundred and forty nations. Leadership Tata Steel: Among the top ten steelmakers in the world Tata Motors: Among the top five commercial vehicle manufacturers in the world Tata Global Beverages: Second-largest player in tea in the world Tata Chemicals: World’s second-largest manufacturer of soda ash Tata Communications: One of the world's largest wholesale voice carriers Institutionalisation of good management practices A key factor that has helped Tata companies grow and establish themselves on the global stage as business leaders in their respective fields is the strong business excellence movement in the group. Tata Group has adapted a business framework from the renowned Malcom Baldridge achetype, called the Tata Business Excellence Model (TBEM). The model falls under the Tata Quality Management Services, and is a tool used to help different Tata companies achieve business excellence, and also include societal initiatives such as governance, safety and the Tata Code of Conduct. The TcoC determines how employees can conduct themselves,
  4. 4. and helps drive ethics and values in the company, thereby adding to its organisational ethos. This defines the Tata Brand.    The core of this framework lies in a proactive attitude rather than a reactive one, in order to always stay ahead of the competition, and focuses on running the business effectively and efficiently. TBEM assessment covers seven core aspects of business operations vis-a-vis leadership, strategic planning, customer focus, measurement, analysis and knowledge management, workforce focus, process management and outcomes of financial and non-financial parameters, and business results. The TBEM is a framework for all employees and operations to standardise practices, in order to establish the core values of the company and bring cohesiveness across different companies in the group. This helps bring widespread commitment of the staff to a vision of excellence, one of the key competencies to achieving institutionalised organisational excellence. Special focus on organisational culture and staff retention Quality has always been one of the pillars of TATA’s way of business, which is why in 1995 the group created the JRD quality value awards. These awards act as incentive for staff to inculcate the organisational values and ensure that quality consciousness prevails in all the organisations that belong to the TATA group. The award recognises a company within the Tata group, which excels in quality management and has achieved the highest levels of quality, in turn ensuring continuous excellence and consequently leadership in the market. Brand Equity The TATA Group has built itself an unshakeable brand equity over the years, mainly by having a strong presence in the community. It thoroughly believes in giving back to the society what came from the society, practices of which are prevalent everywhere the TATA group is. Be it the TATA trust’s work in the areas of health, education, women and child development, and training of youth, or in their sustainable development of the community projects, their work has helped them not only give back to the community, but also helped shape their company policies. Organisational excellence has always been an underlying theme of the Tata Group. In its 140 years of existence, it has emphasised themes of governance, sustainability, values and ethics, long before these concepts have come to be formally acknowledged as integral to idealised precepts of business management. It is these aspects that make this group an example of Institutionalised Organisational Excellence. Group 3 Pranoti W. | Puhoop Agarwal | Rekha Rane | Rohit Rohan | Sanket Kulkarni | Sidharth Uchil | Tarini Bandhu