Moving the normal distribution in a large organization

Moving the normal distribution in a large organization

Dr. Johannes Meier

25 September 2003

HHL

AgendaAgenda

Introduction: Where is the Problem? Tools for Moving the Normal Distribution The Essence of Performance Culture Conclusion: What Does It Mean For You?

IntroductionIntroduction

Large organizations Normal distributions of talent, skill, will

So why do systems like GE function so well? How can managers influence the normal

distribution? What are important tools of the management

system? Finally, what is the entry fee into the system?

Return on Capital Employed

Improved Performance

Merger Tax Credits

Revenue

Divestments

Net Cash Flow

Operating Costs

Personnel Reductions

Net Income

SENSE OFURGENCY

FLEXIBILITY

The Neo-Liberal ContextThe Neo-Liberal Context

Tools for Moving the Normal DistributionTools for Moving the Normal Distribution

1. Common Language and Good Communication

2. Process Management and Generic Heuristics

3. Creating Organizational Flexibility

4. Focus on the Tales of the Normal Distribution

5. Performance Culture

1. Common Language1. Common Language

Common language preprequisite for communication, comparing performance, best-practice sharing, learning

Example: Semtiocs of Net Income Categories Denotation (NI >25%, 10-25%, 0-10%, Fix-Sell-

Close) Connotation (Hero vs. Loser)

1. … and Good Communication1. … and Good Communication

Good Listening Elegant Simplification Authenticity Consistency Relentlessness

2. Process Management …2. Process Management …

6Sigma driving process management Driven by customer (internal and external)

COPIS = Customer Output Process Input Supplier

Stringent project managementDMAIC = Define Measure Analyze Improve Control

2. … and Generic Heuristics2. … and Generic Heuristics

Examples SG&A ratios Gross Margin trends Pricing waterfalls Productivity metrics „Fix it, sell it, close it“

Fix it - MindsetFix it - Mindset

Multi-generational plans „It will get better every month, every quarter, every year“

No silver bullet, but attention to detail „The harder you work, the luckier you get.“ “Always be more prepared than the other guy

… it is not about luck.”

Quick action “When you smell smoke, there usually is a fire.”

3. Creating Organizational Flexibility3. Creating Organizational Flexibility

Organizational flexibility capability to move individuals freely within the organization to a best match of their capabilities and the organization‘s needs

Grading (Session C) Succession Planning (Session C) Action Learning & Coaching & Hyper-mobility

Session C - GradingSession C - Grading

7

gGE Capital IT Solutions – GE CompuNet-Direct Reports

G. B.

A. K.

E. S.

K. Sc.

S. M.

M. P.

U. L. CR CR

G. K.

Key: Excellent: Satisfactory: Needs Improvement: Cannot Rate: CR

4 months or less in position

~20%

~10%

P o t e n t i a l

~70%

High Medium Limited

Summary Assessment

Performance

Values/Initiatives Input

Banding Decision:

• Banding K. EB

• Banding L. LPB

• Banding Ku. LPB

K. (4/L)

L. (3/L)

Sc. (3/M)

P. (3/L)

B. (1/H)

S. (3/M )

K. (2/M)

M. (3/L)

for E-Bands: use Black font and for SP-Band: use Blue font and for LP-band: use Green font and for below LPB: use red font and

Up Since ‘01 C

Down Since ‘01 C

Performance change only

= Female

= Minority

= QL/MBB/BB Experience

= Non-country Citizen

Focus on Top 20% - „love them to death“ Incentives Trainings Mentoring Critical Assignments

Focus on Top 10% - „take action“ New job Exit Comment: Tough to implement in European labour law context

4. The Tales of the Normal Distribution4. The Tales of the Normal Distribution

5. Performance Culture5. Performance Culture

Performance culture grows over decades! Key elements of GE performance culture

Commitment Making your numbers Annual productivity increases Personal career progress and development

Strong emphasis on measurements „you get what you measure“

What is in a number?What is in a number?

Goals & Objectives driven by many (!) numbers Over-determined system of goals Stretch targets Many good soldiers on dedicated „missions“ to

keep corporate initiatives in focus Good management = Finding right priorities

Conclusion: Important DistinctionsConclusion: Important Distinctions

Good Soldier vs. Leader

Values as a Means vs. Values as an End

A Job vs. Meaning