The contribution of a reengineering/retrenchment process to organisational effectiveness.
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Date
2002
Authors
Khan, Mohamed S.
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Abstract
With the advancement of technology and rapid globalisation, organisations need to be
alert and responsive to changes in the marketplace. It is expected of organisations to
be lean, low cost producers of goods or providers of services. Those that do not fit this
general description are mercilessly raked aside to make way for new competitors.
Those that do survive cannot stagnate into old style business operations, but have new
adopt new ways to forge forward or suffer a similar fate of other organisations, forced
to close their doors by being uncompetitive.
In the world competitiveness report, seen below, much to the dismay of a handful of
brilliant businessmen, South Africa features in the twenties and thirties, and has for
the past five years shown fair but not rapid signs of advancement into the top twenty.
What needs to be explored are the reasons behind this phenomena. Is South Africa
simply not trying as a nation to move up the competitiveness ranks? It is obvious that
the answer is a simple negative. South Africa is certainly trying, but while we begin to
get into the mode of being competitive, our competitors in the rest of the world have
already begun this process two decades ago and are well experienced in being
competitive and forcing organisations into survival and success.
Bayside Aluminium, a subsidiary of BHPBilliton, the worlds largest mining group,
did exactly that. Bayside Aluminium decided to implement two such reengineering
processes. The first reengineering process, called the BRP or Bayside Renewal
Process was an issue of survival. In other words had Bayside Aluminium not gone
through this process, the smelter would have faced closure within one year. The
objective of this process was to allow Bayside Aluminium to survive for at least the
next decade. The success of this process will be discussed at a later stage in this thesis
in Chapter 2.
The second reengineering process had distinct differences in the way it was conducted
and had a similar objectives but with a different time frame. The second reengineering
process was called the CTG or 'close the gap". The main objective of this process was
to close the competitive gap between Bayside Aluminium and its competitors in the
medium term in order to maintain long term survival. This process was done with the
view of accelerating cost saving exercises like natural attrition, which are more
medium term. Also one of the objectives was to do such an exercise whilst the
company was not under pressure to reduce costs immediately.
The thesis attempts to display the success of the two reengineering processes, whilst
critically evaluating the methods used to implement the two process with a greater
emphasis on the CTG process, being the latter process which BHPBilliton is
exercising at other subsidiaries. Issues discussed and critically analysed in detail are
• Real time cost benefits
• Full time employee reduction success
• Organisational climate before and after the process and its effect on the plant
performance including the future impact of cooperation by Unions
• Bayside Aluminium's movement on the cost curve after the exercise
The learnings that arise out of this study could easily be applied to any organisation
embarking on a similar exercise without having to make the costly mistakes that
sometimes arise during reengineering exercises due to inexperience.
Description
Thesis (MBA)-University of Natal, Durban, 2002.
Keywords
Retrenchment process., Organizational effectiveness., Theses--Business administration.