Three modes of group control

Introduction: To carry out effective group control, we must first clarify the headquarters’ control model for subsidiaries. Generally speaking, the headquarters’ management and control model for subsidiaries can be divided into: operational management and control, strategic management and control, and financial management and control. For example, Shenzhen AVIC Group is positioned in "high-tech manufacturing, real estate, and retail", has low business correlation, and adopts a strategic management and control model. This is mainly reflected in the following: the organizational structure dominated by holding subsidiaries adopts a relatively decentralized strategic management and control model to give full play to the vitality of each business segment, and the decision-making efficiency of subsidiaries is relatively high. Through the strategic collaboration of subsidiaries, the group's competitive advantage is formed, and key resources (technology) are realized. , market, talent, management, finance)* sharing, reducing transaction costs, giving full play to the group's effectiveness, and reflecting the role of the group headquarters in creating value. As a large state-owned industry group, China Shipbuilding Industry Corporation’s development strategy is to highlight its main business and become one of the world’s largest shipbuilding groups, so it adopts an operational management and control model. After professional management consulting, the functional positioning of the group headquarters has been upgraded from a management center to an operations center. The management and control model has evolved from the original relatively decentralized strategic control type to a relatively centralized operational control type. Through four pillars: capital, finance, procurement, and business The centralized management model achieves the effect of the group headquarters sharing core resources, obtaining economies of scale, and controlling operating risks. Three modes of group management and control

1. Operational management type:

The headquarters manages the daily operations of subordinate enterprises through the functional management departments of the headquarters. In order to ensure the implementation of strategies and the achievement of goals, the group's various functional management is very in-depth. Core functions retained by the headquarters include financial control/strategy, marketing/sales, new business development, human resources, etc. For example, human resources management is not only responsible for formulating the personnel system policies of the entire group, but also managing the selection, appointment and removal of secondary management teams and key business personnel of each subsidiary company. In a group that implements this management and control model, the business correlation of each subsidiary company is very high. In order to ensure that the headquarters can make correct decisions and cope with various problems, the number of functional personnel in the headquarters will be large and the scale will be very large.

2. Strategic management type:

The group headquarters is responsible for the group’s finance, asset operations and the group’s overall strategic planning. Each subordinate enterprise (or division) must also formulate its own Business strategic planning and budgeting of resources required to achieve planning goals. The headquarters is responsible for reviewing and approving the plans of subordinate enterprises and giving suggestions with added value, approving their budgets, and then handing them over to subordinate enterprises for implementation. In a group that implements this management and control model, the business relevance of each subsidiary company is also very high. In order to ensure the realization of the goals of subordinate enterprises and the maximization of the overall interests of the group, the group headquarters is not large in scale, but it mainly focuses on carrying out comprehensive balance and improving the group's comprehensive benefits. Such as balancing resource needs among enterprises, coordinating conflicts among subordinate enterprises, promoting "borderless corporate culture", training of senior executives, brand management, sharing of best model experiences, etc. This model can be vividly expressed as "There is a mind above, and there is a mind below." Typical companies that use this management and control model include BP, Shell, Philips, etc. At present, most group companies in the world have adopted or are turning to this management and control model.

3. Financial management type:

The group headquarters is only responsible for the group’s financial and asset operations, the group’s financial planning, investment decision-making and implementation monitoring, as well as the acquisition and merger of external enterprises Work. Subsidiary companies will be given their own financial goals every year, and they only need to achieve their financial goals. In a group that implements this management and control model, the business correlation of each subsidiary company can be very small. A typical financial management group company is Hutchison Huangpu. Hutchison Huangpu Group operates multiple businesses in 45 countries around the world and employs more than 180,000 people. It has ports and related services, real estate and hotels, retail and manufacturing, energy and infrastructure businesses, as well as Internet, telecommunications services and other businesses. The headquarters is mainly responsible for asset operations, so there are not many functional personnel at the headquarters, mainly financial management personnel. GE also adopts this management and control model.

This model can be vividly expressed as "brain, no hands and feet".

The operational management type and the financial management type are the two extremes of centralization and decentralization, while the strategic management type is in the middle. According to the actual application situation, the strategic control type is usually further divided into "strategic control type" and "strategic design type". The former focuses on centralization and the latter focuses on decentralization.

After clarifying the functional positioning of the headquarters, it will be easier to straighten out the mutual relationship and division of responsibilities between the headquarters and its subordinate companies. Subsequently, there will be a clear basis for the selection of the specific management and control model of the group company, the determination of the organizational form, the positioning of functions and the division of responsibilities of each department within the organization, etc. At the same time, the establishment and improvement of the corresponding support system will be a matter of course. For example, in the human resources management system, the most basic work - job setting and job descriptions, value assessment and other tasks are also based on this, so that salary, performance, ability, recruitment, training and other tasks can be built on this basis. and a series of management systems.