What do McDonald’s, Aramark and Microsoft have in common? At first glance, they seem like remarkably different firms. But all of them have experienced strong, measurable success with in3. Learn how from the following business success stories from a company leader’s perspective.
IT Turnaround. Culture Change and Org. Redesign.(SPX Corp) The IT function of a Fortune 200 Company was performing so poorly that senior leadership considered outsourcing it. Satisfaction with IT service was so low that no other alternative was considered. This problem was exacerbated during an acquisition binge when acquired IT groups clashed with HQ IT. In the previous era, corporate IT group directed all IT operations. However, each new acquisition came with its own IT function, which did not want to be told by corporate IT how to run their operation. This eventually led to open rebellion. The fed-up CEO gave corporate IT a year to change its culture or face outsourcing.
When the problem was examined and the culture model applied, it was found that HQ IT had a ‘Superstar’ culture revolving around key individual contributors. Sometime in the past the CIO hired the best talent money could buy during a headcount freeze. They were the best, why listen to the rest. HQ IT culture emphasized a best product output, which resulted in IT staff dictating solutions, strategies and timelines for other IT functions and users in the organization. However, now the company wanted service, not best product. The rest of the organization, it was learned, wanted IT services delivered along the Customer Service culture orientation. In this model, a business unit would ask for services from IT, which would deliver according to the user’s specifications and timelines.
This problem was resolved in three steps:
The old culture was an association of deep skilled individuals. It had to become a cohesive customer responsive team. In the next 12 months, in3 worked with the company to create interventions and structures shaped by the newly identified culture. in3 redesigned all jobs, defined new roles and identified those role’s customer-driven goals. To change the IT culture, each person needed to know what was going to change for them personally; and how they would be measured differently. In3 put in a system to align goals, from the top to the bottom. in3 worked with job incumbents to set goals and measures to focus on outcomes relevant to the new culture. It enabled the CIO to see at a glance the people who did not hit their goals, which indicated his own goals may be at risk—which primarily was saving the IT function by making it more customer responsive. The division head could take immediate action on unachieved goals, if necessary. This was critical for changing the IT culture. in3 also created a competency model of required capability, mapped that model to redesigned jobs, established job capability standards, and reassigned talent to those jobs. In 12 months, the organization had turned itself around. in3 solved the problem by complete changing the IT cultural orientation, from expert to customer service. The culture was flipped 180 degrees. The workforce was refocused, formerly angry customers were now delighted, and therefore, the function was not outsourced.
Outsourcing Initiative, Culture Change and Org Redesign A change in strategy required a culture change for McDonalds’ Facilities Management Division. The old strategy required managers to personally execute & deliver results, and jobs were designed accordingly. The new strategy involved outsourcing to reduce costs and annuity liabilities (payroll). Managers had to solicit and manage a portfolio of vendors who did the execution. This change required a counter-cultural environment for execution driven McDonalds. Incumbent managers, had difficulty managing vendors; they were doers.
in3 identified the new culture and its differences from the old. The new culture required structural changes needed to drive the desired outcome. The old culture, structure, job designs and performance management system reinforced the old objectives, not the new. in3 redesigned jobs and supporting systems to match the new culture and its strategic goals. Culture, jobs, and supporting systems were synchronized.
Then in3 identified those who would fit the new culture and those who probably would not fit and fail if not re-assigned. People were matched to the new jobs based on their personal culture preferences. The project was successful and later expanded to Customer Service, Records Management and Telecom divisions.
M&A Leadership Integration: According to CFO and Fortune Magazines, roughly 75% of mergers and acquisitions are considered “disappointing or outright failures” and only 23% of acquisitions earn their cost of capital. Interestingly, the primary causes of the majority of failures were ‘people problems’ or ‘cultural issues.’ Aramark, a large Food & Facilities Service company, had purchased the Management Services division of ServiceMaster. The strategic intent of the purchase was not being realized due to infighting between the blended executives. They could not integrate the executive team. The executive team was spiraling out of control resulting in decreased performance and morale. After spending $250K on coaching, leadership training etc., all to no avail, in3 was called. in3’s approach to mapping culture anticipates and resolves integration issues. Examining the results, Aramark understood for the first time why the execs couldn’t work together. They understood the executives’ mindsets; why they developed their strategies, how they made their decisions; and how they complimented and clashed. Based on the culture study recommendations, the business unit was reorganized around each executives’ inherent cultural preferences and strengths. The outcome was so successful that they won the Corporation’s Chairman’s Award for outstanding Business Unit performance following year. When presenting the award, the chairman credited the culture study for the turnaround.
Strategic Initiative Integration
New Leadership & Products Require a New Sales Culture:Guardian’s new president was the former VP of R&D. He was promoted to bring new life to an organization that had slipped a bit after the passing of its founder. The new president’s focus was innovative products, which in the glass industry translates to new coatings for specific applications. in3 advised the new president that, while he may be the Steve Jobs of the glass industry, he would fail in 2 years because the sales function would fail to sell what he was bringing to market. He was introducing innovative products, which had the potential to revolutionize the marketplace.
An in3 study revealed his preference was an R&D culture which was different than the rest of the organization. His current sales force reflected the existing organization culture, and understood the world much differently than he did. This was the unnoticed problem. The current sales force did not have the culture, contacts or motivation to sell the new products. This ‘commodity’ sales culture; sold bulk glass to builders—large construction companies. His innovative new glass products required a ‘solution’ sales culture. Glass needed to be sold to architects—and designed into construction projects. The sales force sold bulk commodity glass, and competed on price. He needed Sales to sell solutions and compete on the best glass concepts. He was set up for failure. Even if one of his new products had the potential to be the iPhone of the glass industry, the sales force would not sell it. His sales force had the mindset to sell commodity glass to builders, not solutions to architects. Therefore, he would fail.
in3 advised him of this problem and outlined the type of sales culture needed for success. One of the president’s first initiatives was to revamp the sales function. in3 identified the culture profiles of Top Solution Sales players; included Territory, Regional and Sales managers. Some top sales players modeled the high performing new products culture. Guardian recruited to that profile, using in3 culture tools to understand potential candidates, and created a sales function with individuals who had a solutions sales mindset.
He was remarkably successful. In the midst of the 2008 recession that was crippling his competitors, his revenue and profit exceeded company reach goals, significantly out-performed prior years, and surpassed investor’s expectations.
Old Outdated Job Design: To highlight job fit with the customer, and show an example of job design, top leaders of the Linde Group, a global industrial gas producer, were asked to describe a job that was experiencing terrible turnover. They chose a sales job—the retail outlet manager. They were asked to describe everything for which the job was responsible and responsibilities were listed on a flipchart. Then they were asked, for which of the responsibilities would the job incumbent not get fired or severely reprimanded, if they failed to perform them. After deleting a number of responsibilities from the list, like responsibilities were grouped into accountability areas, or roles. The executives were shocked to discover that the most important roles related to inventory control, not sales. They were putting sales people into inventory control jobs and experienced 70% turnover because of it. There was an audible gasp as they understood why they had the severe turnover problem.
Jobs evolve and people have to fit the real job, not the imagined one. In the beginning, the job’s primary customer was the VP of Sales and the retail customer. But now, with hundreds of stores across the globe, the VP of Logistics was the job’s primary customer, and he wanted to know inventory levels. Job responsibilities, goals and measures had to reflect the primary customer.
Cause of Turnover: Land O’Frost had significant hourly turnover. This problem was primarily the responsibility of HR. Despite HR’s best efforts, the problem seemed intractable. The breakthrough discovery of turnovers clause came after the implementation of in3’s performance management system, inTEGRATE. It was revealed that plant supervisors were not responsible for turnover or retention. It was truly believed that HR could affect turnover in plants despite being located in a headquarters hundreds of miles away. in3 studied the five supervisors who had the largest intake of new hourly employees. Not one listed a goal or measure related to turnover or retention. Not one of the supervisors were accountable. No one, besides HR was responsible for turnover. Therefore, the problem never changed. There was no line management accountability.
Turnover & Lost Productivity Due to Talent Gap: Engineered Glass Products was a $50M manufacturer that saw an abrupt drop in performance due to missed production targets. Believing it to be a culture problem, because many managers were foreign-born, EGP called in3.
in3 discovered it was not a culture problem, but a talent gap problem. EGP had grown rapidly. Manager & Supervisor jobs had grown bigger than their incumbent’s capability to execute. in3 designed and installed a talent system that identified the competence required by each job, the capability existing in house, and those who had the potential to fill those jobs. The new system resolved the problem. Turnover declined from over 75% to under 5%, and Productivity increased 39% in 3 years, as a result of the consulting and system installation.
“Push the Plant’ vs. “Watch the Plant” Managers: As part of an enterprise transformation project, the Linde Group’s VP of Operations was approached with an idea. in3 proposed that the plants could produce up to 10% more product if the talent level of plant managers was improved. A project was proposed to study plant manager jobs to define required capability, and then to identify the capability of current plant managers.
The project was approved, plant manager jobs were analyzed and plant managers were interviewed. It was discovered that some plant managers “pushed the plants”, while others “watched the plants”. The managers who “pushed the plants” understood the interrelationships of all of the plant systems and made it a game to produce as much product as possible within company safety parameters. The other managers did not understand all the plants systems and managed very tentatively. They kept all instruments and reporting systems within limited ranges because they did not understand the interrelationships. Their priority was to avoid problems. They operated extremely cautiously, not innovatively. A competency model was created to define the ‘know how’ for plant manager jobs. Standard’s, or proficiency levels, were set for these jobs. that model was then mapped to plant manager job incumbents. Managers who failed to meet job standards were moved out of those positions and replaced by candidates who did.
With no new capital expenditures or increase in payroll costs, plants were soon producing 10% more product. This was a multimillion-dollar annuity return on a $50,000 project. It was a gift that kept on giving.