Experience

Cases

News

Increasing labour productivity in a petrochemicals business via implementation of organizational changes

Situation

  • When compared with world-leading factories, labour productivity in our client’s plants was poor in both physical and value terms. Additionally, despite the company’s profitability, its net profit per capita was lower than best practice around the world. The shareholders requested that the firm look at how it could optimize its headcount
  • In addition to this, the company’s top management became interested in restructuring the firm, making it more transparent and introducing a more flexible management model, allowing for focus to be directed on developing productivity and increasing operational efficiency

Goal

  • Develop a program to increase labour productivity in the company via organization change, that will increase the level of control, transparency and efficiency in the company

Our approach

  • Analyzed the leading practice in Russia and internationally related to organizational design in the petrochemicals business
  • Analyzed the company’s existing organizational structure and how its subsidiaries function. Identified the main problem areas
  • Identified the target organizational structure and the possibility to optimize functions. The options were identified via use of SPI models – recognized internationally as the key way to rationalize strength and determine the potential productivity within labour in the petrochemicals industry
    • The SPI model is based on annually updated information on labour productivity by headcount, reflecting more than 80 of the leading oil and gas processing and petrochemical companies in the world which also use SPI, which is updated yearly
    • The calculation of the SPI index (number of personnel) took into account labour productivity along with the level of complexity of the equipment in a separate plant, which was assessed by experts from the USA
    • As a result of adopting the SPI model, the number of enterprises in general and the staff numbers within them and in each function were rationalized
  • Developed a road-map of initiatives to lead to increased operational efficiency and increase labour productivity in the company by 2016 via organizational changes

Results

  • Developed a target corporate and organizational structure for the company that met the strategic objectives and requirements of shareholders and the company’s senior management
  • Determined the ideal headcount optimization for the company and calculated the potential savings from organizational changes as well as the potential to increase productivity
  • Developed a three-year program to increase labour productivity in the company by 2016

 

© Strategy Partners Group, 1994-2017
E-mail: