Executive Summary: KSB Term Paper


The KSB Group is among the leading companies in the field of pumps and valves with subsidiaries and affiliated companies all over the world. The KSB name stands for the highest standards of product and service quality. It manufactures and markets a selected range of standard and engineered pumps and castings of world class quality.KSB Ltd aims to provide solutions to problems by widening its product range, while being efficient and profitable.

In this study a complete overview of the KSB Groups has been presented, starting from the brief history of the company and aims and objectives of the organization. The KSB Group’s product line and different projects have being described along with their achievements in the industry.

In the second part of the document, the organizational structure of the KSB Ltd. has been elaborated in detail, discussing the nature of the organization, management hierarchy & the organizational chart. Then we discuss their decision making policy that they have adopted in planning strategy, and staffing & controlling the workforce.

In the third part of the document we discuss the culture of the organization, its leadership style and the performance standards that are being followed. Another significant feature of the organization has been included that is how KSB Group is fulfilling its duties towards the society.

TABLE OF CONTENTS
S.No. Title Page #
Part 1: Introduction
1. History 6
2. KSB Pakistan 6
3. Objectives 8
4. Mission 8
5. Values 8
6. Scale of Production 9
7. Production line 9
8. Projects 10
9. Achievements 10
Part 2: Organizational Structure & Design

1. Nature of Organization 12
2. Management Hierarchy 13
3. Organizational Hierarchy 14
4. Decision Making: Policy 15
5. Planning Strategy 15
6. Selection process 16
7. Training 17
8. Facilities 17
9. System & Process of Controlling 18
Part 3: Organizational Culture
1. Culture of an Organization 20
2. Leadership Style 21
3. Human Factor & Motivation 22
4. Performance Standards 23
5. Social Responsibility Program 24

INTRODUCTION OF ORGANIZATION

HISTORY
KSB is a German based company which was founded in 1871 by Johannes Klein. The KSB Group is among the leading companies in the field of pumps and valves with subsidiaries and affiliated companies all over the world. The KSB name stands for the highest standards of product and service quality.
KSB Pakistan is an affiliate Company of the world famous German KSB Group. KSB Pakistan was established in July 1959 in Lahore. The production facilities at Hassanabdal were completed in 1964 and a full-fledged foundry was commissioned in the same premises in 1980. The Company is ISO 9001 certified by M/s. SGS Pakistan (Pvt.) Ltd. KSB Pakistan became a public limited Company in 1979 providing a broader base for local participation.

KSB PAKISTAN
KSB Pakistan is an affiliate Company of the world famous German KSB Group, which was founded in 1871. The KSB Group is among the leading companies in the field of pumps and valves with subsidiaries and affiliated companies all over the world. The KSB name stands for the highest standards of product and service quality.

KSB Pakistan was established in July 1959 in Lahore. The production facilities at Hassanabdal were completed in 1964 and a full-fledged foundry was commissioned in the same premises in 1980. Now the Company employs over 400 people and has Sales Offices at Lahore, Karachi, Quetta, Rawalpindi, Peshawar and Multan. The Company is ISO 9001 certified by M/s. SGS Pakistan (Pvt.) Ltd. The Company also operates through a dealership network throughout the country. The Company operates a full-fledged Service Department comprising of qualified and experienced personnel capable of undertaking turnkey installation jobs and O&M Contracts.
KSB Pakistan became a public limited Company in 1979 providing a broader base for local participation. The Company’s shares are traded on both the Karachi and Lahore Stock Exchanges. The Company received the Merit Trophy for exports of the Federation of Pakistan Chambers of Commerce and Industry and top Company award for exemplary payment to the shareholders by Karachi Stock Exchange. Another award for Corporate Excellence and Good Management Practices was bestowed on the Company by the Management Association of Pakistan.

During the last three decades, the Company has rapidly expanded its production range to include a large variety of pumps to serve various sectors of the economy. The new pumps for local production have been selected to particularly meet the requirements of sugar, paper and other process and chemical industries apart from meeting the requirements of drinking water supply, sewage disposal and surface drainage schemes. The latest additions have been pumps of large capacity which are specifically meant for irrigation and drainage applications. Pumps are produced in various metallurgical executions including cast iron, Ni-resist cast iron, bronze and stainless steel.

KSB Pakistan has been the major supplier to the vitally important salinity control and reclamation projects (SCARPS) installed by WAPDA. In the agricultural sector, KSB’s name is synonymous with productivity and reliability. The latest technology and know how has been made available to KSB Pakistan’s customers.

KSB pumps are produced strictly in accordance with the design and specifications of KSB AG Germany, in order to maintain standards of the highest quality. Comprehensive inspection and test bed facilities are available at Works, Hassanabdal to ensure compliance with these quality standards. The production facilities are also being regularly modernized and extended to cope with the challenges of new product technology. The foundry is capable of producing sophisticated automotive components apart from pump and valves castings and is a leading supplier of tractor components castings in the country.

OBJECTIVES
Main objective of KSB is to satisfy its customer’s requirements through innovative quality products and efficient services. It aims to provide solutions to problems by widening its product range.

MISSION
KSB Pakistan manufactures and markets a selected range of standard and engineered pumps and castings of world class quality. Its efforts are directed to have delighted customers in the water, sewage, oil, energy, and industry and building services sectors.
In line with the Group strategy, KSB Pakistan is committed to develop into a centre of excellence in water application pumps and be a strong regional player. It wants to market valves, complete system solutions and foundry products including patterns for captive, automotive and other industries. It will develop a world class human resource with highly motivated and empowered employees.
The measure of KSB Pakistan success is being a clear market leader, achieving quantum growth and providing attractive returns to stakeholders
VALUES
• We believe in self-esteem of our customers, suppliers and employees.
• We work as a team where every member owns the process with an entrepreneurial spirit.
• We work with professional honesty and integrity.
• We trust our employees and appreciate their contributions.
• We strive for continuous improvement to achieve excellence in all spheres of our activities.
• We are an equal opportunity employer and follow merit in human resources development.
• We fulfil moral obligation towards society and environment.

SCALE OF OPERATION
The Company has more than 14000 employees, 30 production sites and 60 marketing companies worldwide. At KSB Pakistan there are over 400 people and has Sales Offices at Lahore, Karachi, Quetta, Rawalpindi, Peshawar and Multan. The Company also operates through a dealership network throughout the country. The Company operates a full-fledged Service Department comprising of qualified and experienced personnel capable of undertaking turnkey installation jobs and O&M Contracts.

PRODUCT LINE
• Submersible motor pumps for surface drainage.
• Axially split pumps
• Centrifugal pumps
• Multi-tech high-pressure pumps
• HPK hot water circulating pumps, sewage lifting units
• Isoria butterfly valves
• CPK, KWP, Etanorm and Tyachem industrial pumps plus Isoria and Danais
• LSA slurry pumps
• RDLO pipeline pumps
• Sal-Tech energy recovery system with pressure exchanger, high-pressure pumps and controls
• Zero-leakage pumps type Secochem
• Boiler feed, condensate and cooling water pumps for efficient use of fuel
KSB produce a large variety of pumps to serve various sectors of the economy. The new pumps for local production have been selected to particularly meet the requirements of sugar, paper and other process and chemical industries apart from meeting the requirements of drinking water supply, sewage disposal and surface drainage schemes. The latest additions have been pumps of large capacity which are specifically meant for irrigation and drainage applications.

Pumps are produced in various metallurgical executions including cast iron, Ni-resist cast iron, bronze and stainless steel. KSB pumps are produced strictly in accordance with the design and specifications of KSB AG Germany, in order to maintain standards of the highest quality. Comprehensive inspection and test bed facilities are available at Works, Hassanabdal to ensure compliance with these quality standards. The production facilities are also being regularly modernized and extended to cope with the challenges of new product technology. The foundry is capable of producing sophisticated automotive components apart from pump and valves castings and is a leading supplier of tractor components castings in the country.

PROJECTS
KSB Projects department is involved in new installations, rehabilitation, operation & maintenance of water and waste water transfer and treatment systems. The Projects department designs and implements customized, package systems and installations in close co-operation with our customers all over Pakistan. As a dependable partner with decades of experience, KSB Projects has the know-how to offer customers, innovative systems for all water transfer applications.
KSB focuses on three types of projects namely:
• Turnkey construction
• Rehabilitation & refurbishment
• Operation and maintenance
KSB Projects provides the following Services to the valued customers:
• Complete engineering and design
• Project development and optimization
• Hydraulic and mechanics
• Construction including all civil, mechanical & electrical works
• Automation & electro-techniques
• Project management & controlling
KSB Projects, provides intelligent and economically sound solutions, from planning phase to the commissioning of the finished installation for all applications in the field of water supply, irrigation, drainage and waste water.
In addition, KSB Projects supplies every service needed to run, maintain and monitor the trouble-free operation of customer's installation.
KSB Projects assumes full responsibility for the process as a whole as well as for all tasks involved in the construction of fluid transfer system and all this with a quality Management system certified to ISO 9001.

ACHIEVEMENTS
The Company received the Merit Trophy for exports of the Federation of Pakistan Chambers of Commerce and Industry and top Company award for exemplary payment to the shareholders by Karachi Stock Exchange. Another award for Corporate Excellence and Good Management Practices was bestowed on the Company by the Management Association of Pakistan.

ORGANISATIONAL STRUCTURE AND DESIGN

NATURE OF ORGANIZATION
At KSB Pakistan the focus is on
• Division
• Co-ordination
• Control of tasks and
• Flow of information within the organization.
KSB managers are responsible to distribute responsibility and authority to job holders. Job Descriptions of each employee is approved by Managers and then the employees work according to their laid down job descriptions. Activities are organized in such manner that there are minimal chances of deviation.
KSB Managers structure business. They decide
• Division of labor
• Delegation of authority
• Departments
• Span of control and
• Co-ordination among departments.

KSB Pakistan departments are flexible and can be changed as per business requirements. For example a new department called strategic marketing has been recently introduced based on market demand. One good thing that was observed is that before the commencement of operations all functions of the new department were explicitly planned.

One important factor for the success of KSB Pakistan has been delegation of authority. This process is strongly encouraged as KSB wants its employees not to feel constrained in any way. Employees are encouraged to take as much responsibility that they want to take as long as it is in line with KSB policies. This decentralization approach has improved the employees’ performance and has given them the motivation that they are in control of their respective domains.

Co-ordination within departments and with other departments is also very important. KSB Pakistan encourages open communications between and within departments as long as it is not related to politics or any other anti company activities. KSB Pakistan has benefited immensely with this approach as employees get vital information first hand from others instead of waiting for an email to arrive.
Over the years KSB has organized a sound management structure resulting in company’s success. Though there have been mistakes as well but the best thing for the company has been that it has learned from its mistakes and has moved on with positive vibes.

MANAGEMENT HIERARCHY
The company has a centralized management structure which is headed by a “Management Committee”. This “Management Committee” reports to “Board of Directors” which meets as per statuary requirements. Company management is headed by its Chairman who is also regional controller of the company. Operations of the company are headed by the Chief Executive Office / Managing Director. Composition of the Board of Directors is given as under.
BOARD OF DIRECTORS
Dr. Augus Lee Chairman
Mr. Mohammad Masud Akhtar CEO
Dr. Willi Enderle
Mr. Tonjes Cerovesky
Mr. R. D. Ahmad
Mr. Sikandar M. Khan
Mr. Zahid Hussain
Mr. Hassan Aziz Bigarami

DECISION MAKING
POLICY IN DECISION MAKING
SWOT analysis and cost-benefit analysis is carried out at this point to check the pros and cons of the particular plan. The decisions are presented to the top management. In annual meeting decisions are made however if there are some critical decisions which are to be taken, then these are taken up in the board of director meeting.

KSB PLANNING STRATEGY
KSB Pakistan being a part of KSB AG has to follow a planned course of action. The planning process is not limited to senior management but all departments have to plan things in advance and their departmental performance is measured against those plans. All employees are part of this process at some stage. The Senior Management makes the overall strategic plan for the company which is approved by Board of Directors and then by KSB AG. On Departmental level the most important plans are
• Sales Planning / Sales Forecast
• Financial Planning
• Production Planning
Sales Forecast is an insight into different areas on to which KSB Pakistan would be focusing in the coming year. KSB Pakistan has segregated its products into different product lines which cater to different industry segments. The Sales Forecast basically tells the management that which areas will be targeted in the coming year.

Financial Planning is also one of the most important areas in day to day operations of the company. This plan is approved by Regional Controller who is based in India. The plan not only outlays the financial ins and outs but also shows areas of investments like Term Finance Certificates, Bonds and Government Securities. All purchases are made according to approved Financial Plan and there can be no deviation from this approved plan. One of the areas of special emphasis is reduction in operating cost which is closely monitored. The Cash Flows and Receivables are also very important as the company neither can afford to be cash rich nor cash dry.
Production planning which is dependent on customer orders is also very important. This planning is done by a small planning department which co-ordinates with sales and purchase people to come up with daily, weekly and monthly production plans. The company is shifting to “Lean Manufacturing” which will be another milestone in terms of very few companies in Pakistan who have successfully used this methodology. One small mistake in production planning can cause the whole factory to shutdown which is why the production planning is very critical.

In addition to these other departments have their own plans. For example Human Resource Department has its own plans which include scheduling of employee trainings, hiring of new employees as per approved plans etc.

SELECTION PROCESS
At KSB there are certain criteria for the selection of the employs. There are both internal and external recruitment processes. In internal process the company does not advertise in news papers or any media. However external recruiting is advertised in newspapers and the application information is given in it. The steps which the company takes in selection process are
• Advertising
• Considering the Applicant through qualification
• Short listing
• Tests based on various functions in day to day routine
• Short listing
• Interviews
• Probation
• Confirmation
In advertisement the company specifies the qualification needed for the job may it be educational background or experience. At entry level KSB basically consider graduates from LUMS, LSE, UET, NUST and GIK only. However if experience is required for any particular post then the minimal experience one should have is also mentioned (this varies with job description). Pay package and fringe benefits are also mentioned in advertisement. After advertisement the company considers those applicants which seem most suitable to the organization. At this point the applicants are short listed and the shortlisted applicants are assessed on their knowledge they have acquired during the field of their study or working. There are certain types of test designed as per the job e.g. for marketing such test are conducted through which one could assess the ability and temperament of the applicant. Psychological tests are conducted as well. After this process again short listing is done to interview only those who have qualified through the tests. Now interviews are done to further judge the employee, if they find the person capable then they are assigned for probation. Probation period varies but the minimum is of 3 months. Probation period is the time for the employee to show his/her talents in how they tackle things. Lastly if the employee is competent then he/she is confirmed.

TRAINING
There are two types of training being carried out at KSB
• Internal
• External
Internal trainings are in-house training which are conducted within the organization for the upgrading of the employee.
External trainings are conducted outside the organization these are in form of seminars and workshops conducted both nationally and internationally.
FACILITIES
• Medical
• Provident fund
• Gratuity
• Car policy
• Loans
• Telephone
• Bonuses
• Scholarships in training

SYSTEM AND PROCECSS OF CONTROLLING
• Administrative control
• Financial control
• Purchase control
• Control over employees
ADMINISTRATIVE CONTROL:
Administrative control is the most important factor in the success of any organization. No compromise is made on any policy or principle no matter who gets affected. For example “coming on time” to work places in KSB is strictly followed and even the MD has to punch his card. Company vehicles are used under strict administrative control with proper permission. No employee is allowed to sit late without getting approval from his immediate boss.

FINANCIAL CONTROL:
KSB Pakistan also has a strong financial control system in place. All expenses are according to approved budget layouts and no one is allowed to exceed budget. Day to day spending is properly accounted and any discrepancies are immediately reported to Financial Controller who takes necessary action. In addition the company has an “Internal Audit” department which does spot checks of financial information.

PURCHASE CONTROL:
KSB Pakistan purchases are also strictly controlled. The purchases are done through approved vendors who have to pass stringent requirements. The suppliers are regularly audited against their promised delivery dates and if there is a delay in deliveries they are penalized. Supplier rates are also regularly checked against competitors and it is ensured that the rates are not above market prices. Furthermore if there is any problem in terms of quality of supplies, the shipments are returned and the supplier is penalized. All purchases at KSB Pakistan are through the central purchase department.

CONTROL OVER EMPLOYEES:
Employees are also controlled by measuring their performance against some strict qualitative benchmarks. Employees who cannot perform as per expectations are simply asked to leave by KSB Pakistan management. It is evident that KSB Pakistan has got a strong control mechanism in place which is one of the reasons for its success over the years.

CONTROL OVER THE YEARS
Over the years up till now the organization has not faced any kind of problems over control. The organization has a very friendly environment where all the employees are at ease so there are hardly any problems of controlling.

ORGANIZATIONAL CULTURE

CULTURE OF THE ORGANISATION
Organization Character is an aspect of organizational culture that refers to the "behind the scenes personality" of a company. These are the explicit or implicit protocols that soon become apparent to all employees. KSB Pakistan has an Entrepreneurial Organizational Culture with a system of shared values, beliefs and norms of its members. The organization values creativity, creative people believing that innovating and seizing market opportunities are appropriate behaviors to deal with problems of survival and prosperity, environmental uncertainty and competitors' threats.
Innovation has been the main reason for the growth of this company and innovation is brought by people. KSB Pakistan has always encouraged innovation and creativity. In market the only way to survive is to come up with new products.

Since the culture takes into account how an individual's perception of his/her company is shaped to a large extent by day-to-day experiences, the Management has an open door policy where by anyone can walk into any senior manager’s office and can speak his mind. Good ideas are appreciated both in terms of economics as well as socially. Promotions are mostly dependent on how much an employee has added value to the organization during a fiscal year
Major events are celebrated in the shape of monthly dinners and tea parties. These events are attended by are regularly attended by Senior Management. The company also has a weekly intercompany publication which highlights the achievements of different employees or departments. New employees and birthdays of employees are also a regular feature of this publication. Thus this publication gives the feeling to everyone that they are part of a family and everyone’s efforts are appreciated.

LEADERSHIP STYLE
KSB Pakistan believes that an organization has the greatest chance of being successful when all of the employees work toward achieving its goals. Since leadership involves the exercise of influence by one person over others, the quality of leadership exhibited by supervisors is a critical determinant of organizational success. Thus, supervisors study leadership in order to influence the actions of employees toward the achievement of the goals of the organization.

KSB Pakistan believes in hiring the best people and is fully supportive of their efforts to lead their respective domains. At KSB everyone has to show leadership qualities. This is necessary because the company believes that a good leader can not only improve quality of work but can also bring dividends to the company in terms of an effective work force which is totally motivated.

KSB believes that when we lead people, motivate them and constantly communicate with them, they will be interested in carrying out what had been allocated to them. Unless people are properly led they will not do the intended task. People need to be constantly motivated and directed to perform the intended task we expect out of them. Then achievement of our objective will be certain. Based on this belief employees at all levels are encouraged and in some cases given trainings to become effective leaders.

At KSB Pakistan Leadership skills are also measured by checking the motivation level of different employees working under a particular leader. If the employees are found to be un-satisfied with the leader then either the leader is changed or is given the opportunity to attend some professional leadership trainings so that his deficiencies are removed. The Management at KSB wants its employees to lead things and wants to pass on the message to the employees that it is their company.
One important factor that has been observed is that the Management at KSB believes in leading by example. For example GM level people have been observed doing field work during installation of pumps along with workers. This not only shows their commitment to the organization but also exemplifies their leadership qualities. It also shows that the management is willing to go to any lengths to motivate its employees.

HUMAN FACTOR AND MOTIVATION
For an organization which is solely dependent on product sales, keeping the employees motivated is crucial for its survival. Like any organization KSB Pakistan has had its fair share of ups and downs. There have been times in its history when due to Pakistan’s economic conditions, sales have nosedived. The strength of the organization becomes evident when it not only survives such hard times but also emerges out of the crisis more powerful than ever. Studying different financial statements that were made available, today the company stands at an annual sales intake of more than 1 Billion Pak Rupees.

KSB Pakistan keeps its employees motivated in a number of ways. For example recently all sales executives were given brand new laptops which were a long standing demand from them. Besides these types of short term benefits there are a number of long term benefits as well. All employees’ performance is benchmarked against quantitative indicators. The company uses “Balanced Score Cards” to measure performance.

Sales staffs which form the life line of the company are motivated through a special “Sales Incentive” program. Under this program targets are given to each sales executive which is tied to some big financial incentive. Bonuses which include cash payment, cars, and trips to foreign countries are some of the incentives which are on offer through this program. Further motivating factors include trainings in Germany on rotation basis as well as participation in all relevant local trainings and research seminars.

These perks and benefits are not limited to sales staff only. All departments are kept on equal ground. For example purchase department benefits are benchmarked against the percentage of savings they make every year in purchases. Similarly for stores departments the benefits are benchmarked against reduction of stock in hand. All departments are required to give an annual training requirement for their. All these trainings help the employees motivated as they are all the time learning new things without the need to change their jobs.
One surprising thing during the study was that despite an exhaustive list of motivating programs, the company has one of the highest turnover rates in Pakistan which stands at 25% on an annual basis. The main reason for this high rate is that employees of KSB are readily accepted by competitors on higher salaries and this is something that the company is seriously looking into these days.

PERFORMANCE STANDARDS
KSB Pakistan being a manufacturing company has to follow strict industry, quality, financial, administrative and safety controls. The effectiveness of these controls is measured and reported to KSB AG and to external auditors who regularly perform quality audits. The company cannot be complacent in controlling as it is also in export business in which representative of foreign buyers does snap inspections of factories and related areas.
On the production side each and every component, assembly and even sub assemblies are properly labeled, dispatched with proper verification and their usage is properly accounted. Wastages in raw materials or due to faulty production are taken into account and guilty party is penalized. Furthermore all production activities are ensured to be according to plan because if production plans are not properly followed it may lead to loss in terms of workers sitting idle or simply no work because of materials not coming on time.

SOCIAL RESPONSIBILITY PROGRAM
KSB Pakistan although does not run any full time social programs but contributes on and off in different social events. Some of its contributions over the years have been donation of computers to orphanages, financial assistance to lower grade employees, support of next of kin after death of an employee and provision of medical facilities in best hospitals in case of accident. The company also gives a percentage of its annual profits to different Non Government Organizations (NGOs’).

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