The document discusses various concepts for reorganizing service centers and functions within large organizations. It presents five main types of organizational structures for service centers: competence centers within the central administration, competence centers within individual product companies, spin-offs (independent service companies), outsourcing services, and making or buying services. It then provides examples of specific functions that may be suitable for each type of structure.

1. - 37 - MUC-0140-97097-02-6a
Organisational redesign of service centers
The alternative concepts generate different types of business and rules for
service centers
Types
Objec-
tives
Risks
Suitable
for …
Competence/
service center
central administration
Competence/
service center in
product company
Spin-off
(Service GmbH)
Outsourcing of service
make or buy
HQ HQ HQ
• Control
• Realisation of synergies
• Success factors critical to
management
• Neutrality
• Decentralisation
• Cost allocation according to
the principle of causation
• Decentralisation
• Entrepreneurship
• Focus on core business/
functions
• Focus on core business/
functions
• Flexibility
• Cost transparency
• Self-sufficiency
• Cost increase
• Non-business-orien-
ted decisions
• Mix of management
and service
• Loss of neutrality
• Short-term cost/performance
optimisation
• Too much strain/loss of
motivation
• Neglect of group interests
• Know-how drain
• Higher transaction costs
• Cost control
• Irreversible dependencies
• Know-how drain
• Reduction of internal
capacities
• Control/system
functions
• Functions predominantly used
by one business field
• Non-critical handling functions
• Functions using the specific
know-how of one business field
• Locational functions
• Functions with potential to
increase efficiency
• Guarantee protection of know-
how
• Marketable functions/services
• Functions with large fluctuations
of capacity utilisation
• No specific group know-how
• Functions with clearly defined
service volumes
HQ
Source: Roland Berger & Partner

2. - 36 - MUC-0140-97097-02-6a
Allocation of optional central functions
Allocation alternative Sample companies Reallocated functions
Spin-off
(Service GmbH)
HQ
• KHD
• Krupp
• Mannesmann
• Hoesch
• Springer
• AGROB
• Klöckner-Werke AG
• Daimler Benz
• AEG
• Hardware and software
• Auditing
• Licensed sales/handling
• Personnel management
• Central research
• Insurances
• Training and seminars
• Real estate/housing
• Forwarding/dispatch
• Travel agency
Competence/
service center
in business field
HQ
• MBB
• VOEST Alpine
• Hoesch
• Dornier
• Freudenberg
• AEG
• Accounting
• Data processing (primarily hardware)
• Locational services
(security, canteen etc.)
• Purchasing
• Training
• Payroll accounting
• Pensions
Div. Focus on
• Org/DP
• Accounting functions
• Consulting
• Locational services
Outsourcing of
service
HQ
In practice, there are typical, time-honoured concepts for the organisational
redesign of service functions
Source: Roland Berger & Partner

3. - 35 - MUC-0140-97097-02-6a
1.5 Service center

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The holding company's typical core functions are the result of the type of
management pursued
Financial
management
Operative
management
• Operative controlling/budgeting
• Central administrative functions/systems
• Coordination of product development/centralised functions
• Coordination of distribution/central functions
Management functions
required
Staff
dimensioning
Type of
management
Increasing
number of
functions
Strategic
management
Typical core functions of a holding company
• Group strategy/ROI participation portfolio
• Allocation of resources, finance
• Financial management/treasuring
• Participation management (reporting)
• Investment guidance/monitoring/strategic planning
• Strategic group planning/controlling
• Programme planning
• Participation planning/M+A projects
• Synergy management via committees and central functions
• Target coordination of operative plans
• Basic issues regarding personnel/management development
• Central services/facilities, if applicable
Staffing of
central
administration
Source: Roland Berger & Partner
Example

5. - 33 - MUC-0140-97097-02-6a
Entrepreneurial vision
and objective
Determinants and characteristics of the holding company's organisation
Type of management pursued by partners
Type of holding
• Financial
• Strategic
• Operative
Functions
• Core functions
• Optional functions
• Service functions
Staff
dimensioning
Management concept
and
management
situation
Management
system
and vertical
collaboration
Business/participation portfolio
Strategic and operative management
demand
The type of management pursued thus forms the basis for the detailed design
of the holding company
Source: Roland Berger & Partner

6. - 32 - MUC-0140-97097-02-6a
The management focus can lead to three specific types of holding companies
regarding management objectives and central functions
Typical
central
functions
Management
objectives
• Maximum return on equity -
no matter in which business
• Dividend/return on capital
• High company values
• Strategic optimisation of resource
utilisation
• Management of synergies
• Management of "white spots"
• Industrial management company
• Strategic and operative result
optimisation using all business fields
• Operative control/optimisation of
business fields/functions
• Market shares, ROI, growth
• Finance/Treasuring
• Legal/tax
• Group accounting
• Participation management
• Finance
• Group controlling
• Strategic planning
• Executive development
• Distribution/sales coordination
• Group marketing
• Group services
Optional:
• Central research
• Group distribution
• Management staff
e. g.
• Finance/accounting
• Central distribution
• Central development
• Works organisation
Types of
holding
companies
Financial holding co. Strategic management holding co.
Services
Operative management holding co.
Central
busi-
ness
units
Source: Roland Berger & Partner

7. - 31 - MUC-0140-97097-02-6a
Decentralisation and establishment of management holding companies are the
general organisational trends for group organisations
General strategic/organisational trends
Increasing significance of takeovers, mergers and
strategic alliances within the framework of international
division of labour and globalisation
Rediscovery of small, flexible, decentralised business
units with own entrepreneurship to deconcentrate large
companies and utilisation of business potentials
Decentralisation of DP into functions and flexible
structure-independent management/communication
systems
"From hierarchy to expertocraty" as structural characteristic
of large companies, i. e. flat structures and new management
requirements
• Necessary business orientation of
organisation by way of business
field segmentation
• Decentral management and organisational
concepts under a minimum of superior
structures (as a framework for values, vision
and synergies)
• Often extreme re-thinking in the companies
due to loss of core business dominance in
structures, qualification and culture
Management
holding
organisation
Source: Roland Berger & Partner

8. - 30 - MUC-0140-97097-02-6a
1.4 Holding concept

9. - 29 - MUC-0140-97097-02-6a
• Personification of inte-
gration is necessary
• Multipliers must come
from both companies/
become firmly anchored
in the other one
Initiator
• Start of communication
process with six core
issues
Contents
• Most important target
group during 1st phase are
executives
• Executives need to commu-
nicate/support integration
top-down
• Information of responsible
executives at Ruther group
Target group
• Focus on existing media
• Supplemented by ad hoc
transition media later to be
integrated into the overall
concept
Media
• Reduction of individual
interpretations/insecuri-
ties
• Speeding up top-
down information
Effect
Who says what to whom using which media pursuing
which
goal?
1. Historical development
from point zero to present
2. Strategy
3. Process of integration
4. Intercultural collaboration
5. Structure/organisation
6. Results of transition
teams
• CEO of both companies
• Executives from both
companies
Total number of contacts
(Nov./Dec. 94)
20.253
(Executives + staff)
• XY actual
• AB today
• Company newsletter of
integrated company
• Management summaries
• Segment-internal jour fixe
• Achievement of common
base of information
Activities during the start phase
The project phases' individual parameters of communication are designed in
great detail
Example PMI
Source: Roland Berger & Partner

10. - 28 - MUC-0140-97097-02-6a
A requirement for successful communication during a PMI-Project is a
comparable level of information of all those involved
Start:
Communication of
decision-making
process
Turning point:
Objective:
Communication of
integration/success
and focus on
business process/
day-to-day business
Phase
Communication of
progress/success/
decisions in the
integration process
1.
2.
3.
Process
Communication
Objective
• Creation of a common basis of
information
• First step towards common
convictions/opinions
• Modification/adjustment of
communication
• Anchoring and acceptance of
common values, standards and
objectives
Tools
Media, e. g.
• xy actual
• Company newsletter
To be supplemented by:
• Personal communication (e. g. social
contacts)
• Feedback (e. g. survey, workshops)
• Management tools (e. g. training/
preparation for rotation)
Closed concept
• Top-down
• Bottom-up
Information
Information
Feedback
Sender Recei-
ver
Communication concept
Example PMI
Source: Roland Berger & Partner

11. - 27 - MUC-0140-97097-02-6a
1.3 Communication concept (KK)

12. - 26 - MUC-0140-97097-02-6a
The results of the cultural audit cover the major factors of corporate
management
• Strategic success factors
• Characteristics of the company
• Structure
• Working methods
• Staff/executive qualification
• Incentive systems
• Motivation
• Personnel management
• Career development
• Information/communication
• Management style
• Working atmosphere
• Flexibility/readiness to change
• Innovation orientation
• Behaviour towards staff/trust
• Work processes
• Decision-making processes
• Openness/transparency/
communication competence
• Entrepreneurship
• Internationalisation
Result
areas
Questionnaire
relating to
individual
questions
relating to several
questions
• –––––––––––
• –––––––––––
• –––––––––––
Source: Roland Berger & Partner

13. - 25 - MUC-0140-97097-02-6a
The cultural audit is performed in three steps using standardised tools
Pilot phase
• Approx. five to ten interviews/explo-
rations with executives and participants in
the project to determine focus issues
• Adjustment of standardised questionnaire by
integrating the company's specific situation
• Coordination of questionnaire action
• Design of sample/selection of target persons
Collection phase
• Mailing of questionnaires to executives/
staff (incl. explanation of objectives and
procedure)
• Monitoring of questionnaire-return and
evaluation of responses
• Interpretation of responses
• Development of recommendations for
action/measures
Communication of results
• Presentation (Board/executives)
• Management workshops
– Detailed discussion of results
– Expansion/coordination of recommen-
dations for action
• Internal communication in the company
1 2 3
Steps of cultural audit-approach
Source: Roland Berger & Partner

14. - 24 - MUC-0140-97097-02-6a
The cultural audit identifies weaknesses in the collaboration between a
company's staff and its executives
Cultural audit
• Identification of disruptive factors
• Weighted evaluation of identified
disruptive factors
Objectives
• Personal interviews
– Executives
– Staff
• Questionnaires
– Executive survey
– Staff survey
• Workshops with executives
– Guarantee/expansion analysis
– Conceptualisation of target culture
Tools
Source: Roland Berger & Partner

15. - 23 - MUC-0140-97097-02-6a
1.2 Cultural audit (CA)

16. - 22 - MUC-0140-97097-02-6a
The critical project phase is the deduction of organisational consequences
from business system and strategy
Source: Roland Berger & Partner
• Concept development
• Workshop
• Presentation
Development of
design concepts
and alternatives
• Management concept/structure
• Organisational structure
Detailed design of
target organisation
incl. actual/target transition models
Strategy audit
• Identification of strategic position, opportunities/risks,
orientation and strategies
• Business field segmentation incl. business system
and success factors
• Deduction of strategic and organisational requirements
for management, structure and systems
• Expert interviews
(internal)
• Secondary data
• Workshops
Pilot interviews
Familiarisation with business, problem structure and focuses
of the survey
• Top management/
shareholder interviews
Step 4
Step 5
Step 2
Step 1
Step 3
Organisational
assessment
• Actual organisation and distribution of functions
• Strengths and weaknesses
• Company image and management concept
• Executive
discussions
(1st - 3rd level)
• Secondary data

17. - 21 - MUC-0140-97097-02-6a
SBO: From business system to strategy-oriented group structure
Source: Roland Berger & Partner
Functional,
divisional
service
relations
Management
concept
Actual
Business
position/
strategies
Actual
target
Corporate
organisation/
culture
Actual
Model/targets/vision
of partners
and top management
Controlled
management
concept
central/decentral
Business
field
identifi-
cation
Business
affinities/
synergies
Business
field
strategies
Business
system/
success
factors
Manage-
ment
system/
potential
Strengths/
weak-
nesses
Strategic evaluation
of functions
• Core functions for the
management of a
business field
• Optional functions
• Superior control
functions
Formation of busi-
ness units
• Bundling of core
function into manage-
ment areas (business
units)
• Formation of cen-
tralised functions
and service areas
• Organisational
structures
Detailed design of
target organisation
• Management struc-
ture of business units
• Management structure
of superior control/
synergy utilisation
• Horizontal and vertical
management system
• Management
requirements
Manage-
ment
require-
ments
Analysis
Manage
ment
require-
ment
Corporate
culture
Deduction Design
SBO-approach

18. - 20 - MUC-0140-97097-02-6a
Strategy-based Organisation: How to establish business-oriented organisational
structures
Optional
functions
Market
Business activities
Business
needs
Core functions
Deduction of
strategic business
needs
Identification of
core functions
Creation of
business units
Design of overall
management
structure
Adjustment of
management
systems
Segmentation of
business
activities
Management
Advisory
boards
Central
functions
Commit-
tees
Service-
Center
Business
units
Optional
functions
Line functions?
Service functions?
Make or buy?
Subsi-
diaries
Internal structure
Source: Roland Berger & Partner

19. - 19 - MUC-0140-97097-02-6a
1.1 Strategy-based organisation (SBO)

20. - 18 - MUC-0140-97097-02-6a
Examples of existing consulting programs
1. Strategy-based organisation (SBO)
2. Cultural audit (CA)
3. Communication concept (KK)
4. Holding concept
5. Service center
Source: Roland Berger & Partner

21. - 17 - MUC-0140-97097-02-6a
1. Classical issues and tools of CC Organisation

22. - 16 - MUC-0140-97097-02-6a
Newly developed or currently being developed
Consulting programs, tools and new concepts of CC Organisation – an overview
Products/programs Instruments/tools Industry know-how
Marketing tools
(Issue papers)
Basic studies/
organisational concepts
• Benefit for public image/
competence references
• Project modules • Accessibility/
up-to-dateness
• Marketability
• Standardisation
(manual)
• Internal training module • Marketing/acquisition base • Innovation for new
programmes
• Marketability
• Defined client benefit
• Science/practice links
• Internal training
• Basic expertise/know-how• Value for publication• Standard approach • Documentation
(AA)EDP-supported process
analyses: Supplement
process cost analysis
(SGS)Strategic reduction of
overhead/structural
adjustment
(FKD)Functional ratios file
(HDD)Holding benchmarking/
documentation
(PA)Personnel structure
analysis
(ÖHD)Public sector
documentation
(CA)Cultural audit
Management systems:
Adjustment to divisional
requirements
(KA)Cost structure analysis (BRD)Organisational
documentation by
industry
(CCP)Cultural change
programme
Lean management/
Business reengineering
(KK)Communication concept
(FA)EDP-supported
function analysis
(OGK)Operative reduction
of overhead
Study on European
management culture
Holding concepts
Family-owned businesses
(PAD)Personnel
structures file
(SBO)Strategy-based
organisation
(PMI)Post Merger Integration
• CC Marketing
Model for transnational
company management
incl. practical examples
(TUF)
Virtual corporation
concept
(RL)Implementation guidelines
Networking
Source: Roland Berger & Partner

23. - 15 - MUC-0140-97097-02-6a
B. Tools and concepts of CC Organisation

24. - 14 - MUC-0140-97097-02-6a
The WDR example shows that interactive projects are more costly, but can
achieve better results
Source: Roland Berger & Partner
9 3
6
12Time
Cost
2$
5$
2$
5$1$5$
Quality
Errors
t
Results
• Reduction of processing times by up to 80 %, e. g. fee calculation
and remuneration of freelancers from three weeks to three days
• A minimum of DM 18 million direct cost reduction
• Establishment of internal customer/supplier relations
reduces error rates and increases customer satisfaction
Example

25. - 13 - MUC-0140-97097-02-6a
This approach counts on a continuously increasing employee participation in
the course of the project
Active and passive participation of employees in the change process
10%
100%
Anchoring, contin-
uous improvement
DisseminationPilot
implementation
Actual analysis,
target forecast
Kick-off
Communication and
off-and-on
participation
Work in the
changed
organisation
Process/project teams
Employees
Source: Roland Berger & Partner
Example

26. - 12 - MUC-0140-97097-02-6a
The pilot implementation forms an integral part of the interactive bottom-up
project work at WDR
Selection of process
Actual analysis
Concept and measures
Pilot implementation
Dissemination
Anchoring
• Workshops
• Individual tasks
• Basis teams
• Cooperation with
divisions concerned
T C Q
• Pilot region
• Set targets
• Training
• …
Source: Roland Berger & Partner
Steps of project work at WDRExample

27. - 11 - MUC-0140-97097-02-6a
Top-down approach
Objectives defined
by the Board
Desk research/
benchmarks
Interviews at manager level
Target concept
(discussion)
Implementation
Consultant as expert,
little interaction
Source: Roland Berger & Partner
Steps of project work at Deutz Motor GmbHExample

28. - 10 - MUC-0140-97097-02-6a
The decision for a consulting approach depends on the objectives pursued
Consulting
approach
RB&P
consulting
programs
Client
objectives
Company development
Bottom-up
Starting with the employee
Restructuring
Top-down
Starting with the business system
Source: Roland Berger & Partner
Alternative consulting approaches

29. - 9 - MUC-0140-97097-02-6a
2. What is the proceeding in organisational projects?

30. - 8 - MUC-0140-97097-02-6a
Fields of application for organisational consulting
• Horizontal and vertical structuring
• Functional and object orientation
• Centralised – decentralised
• Staff line
Structures
• Division of labour – integration of functions
• One piece flow
• Coordinative mechanisms
Processes and cooperation
• Operative and strategic controlling
• Management systems, forums
• Incentive systems
Systems
• Thinking in terms of divisions
• Value added/customer orientation
• Exchange of information
Culture
Management
Source: Roland Berger & Partner
Five fields of potential change have to be worked on

31. - 7 - MUC-0140-97097-02-6a
The main objective of organisational consulting is to improve efficiency and
effectiveness of an organisation
External
factors
Internal
factors
Time, cost and quality
as competitive factors
Activities in the world market Technological progress
Product/market diversity Complex structures Size
• Reduced product life cycles and market
cycles
• Delivery time and flexibility of delivery
• Eastern Europe
• Globalisation
• Competitive/cost pressure
• High demand for capital and know-how
• New technologies as success factor
• Diversity of business
• High coordination expenses
• High degree of division of labour
• Many hierarchical levels
• Staffs
• Turnover
• Employees
• Countries
• Increase flexibility
• Strengthen innovative power
• Improve ability to cooperate
• Manage core competences
Objectives of organisational consulting
Source: Roland Berger & Partner
Determinants and objectives of organisational consulting

32. - 6 - MUC-0140-97097-02-6a
International organisational structures – an overview

33. - 5 - MUC-0140-97097-02-6a
1. What is organisational consulting?

34. - 4 - MUC-0140-97097-02-6a
A. Object and approach of CC Organisation

35. - 3 - MUC-0140-97097-02-6a

36. - 2 - MUC-0140-97097-02-6a
A. Object and approach of Organisation 4
1. What is organisational consulting? 5
2. What is the proceeding in organisational projects? 9
B. Tools and concepts of CC Organisation 15
1. Classical issues and tools of CC Organisation 17
2. New consulting programs 38
C. Structure and tasks of CC Organisation 44
Index Page

37. - 1 - MUC-0140-97097-02-6a
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Start-up Seminar
– Organisation –
Roland Berger & Partner GmbH
International Management Consultants
Munich, August 1997

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