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Banks could gain a lot from SMEs, says expert
“What the banking sector needs to do is to put processes and risk management systems”...
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Case Study Of A Consulting Assignment Executed By Zenomic Management Consultants

Background: XYZ Systems Private Limited1 , a Small and Medium Enterprise (SME) was promoted in 2000 by a first generation entrepreneur. The company was set up in India in strategic alliance with a company in the Far East and its product portfolio includes remote meter reading, meters with wireless Modem and Telemodems. State Electricity Boards (SEBs) were the main customers of the company.

Promoter and Management team : The promoter, an engineer had a very good understanding of the business and enjoyed a strong rapport with the customers. With the growth in business, a formal second tier of management was created. The second tier of management was competent in handling their responsibilities. However, typical of an SME, the promoter was centrally involved in the day to day activities. While reporting relationships existed as per the organization structure, personnel at various levels continued reporting to the promoter .

Issues faced by the company : With the power sector expected to see huge investments, XYZ was poised to grow four fold from a turnover of Rs. 30 crores to Rs. 120 crores in the next two years. Growth in business also posed organizational challenges for a company aiming to grow big. While the operations team had been traditionally strong, there were issues with the Research and Development and Purchase teams. The Research and Development team, time and again had changed product specifications which resulted in delays in delivery and consequent penalties levied on the company. Purchase of inputs had not been very systematically done from a cost point of view. On many occasions, the company resorted to purchase of high cost material when similar quality material was available at lower costs. Inefficiencies of the Purchase and Research and Development teams impacted the company’s profitability . The company was ISO 90001 certified for systems and processes and had an ERP (Enterprise Resource Planning) system for all its functions. However, these were not followed in their day to day operations. MIS reports were not available to the promoter and senior management team. Lack of systems showed up in their financial management as well.

Zenomic’s role and implementation : Zenomic’s role as a consultant was to restructure the organization to facilitate effective functioning of the organization embarking on a high growth trajectory. The various steps in implementation broadly involved :

  • Creating a new organization structure and skill sets required for each position in the structure
  • Mapping skill sets of existing personnel and identifying gaps in the structure. Retrenchment of personnel whose skill sets did not map the desired skill sets was not an option as most of them had a history of long association with the company. Instead, redeployment to other group companies was considered the best option for these employees
  • Communicating the new organization structure to the existing senior management team
  • Variable pay as part of the compensation package was introduced across managerial levels to ensure that organizational goals were met. The concept and its merits were communicated to the employees through various workshops.
  • Recruitment of personnel across the hierarchy
  • Developing an year long training calendar for managerial staff

XYZ - Post implementation : XYZ did capitalize on the power sector boom and achieved its sales targets as projected largely due to the contribution of the senior management team. The promoter highlights the introduction of the variable pay structure to be a big contributor to the company’s success. Systems and processes have improved significantly and are quite robust for the present level of operations.

1Name of the client has been changed for confidentiality reasons

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