MHR 523 Lecture Notes - Lecture 8: Job Analysis, Canadian Business, Job Design

TOPICS: Corporate Culture

SUMMARY: Kimberly Clark was a company characterized as paternalistic. It was a place where you could have a job for life. The company paid above market salaries and avoided layoffs. Low performers didn't face consequences and could hide "in the weeds." That's changed as the company significantly overhauled how it evaluates and tracks employees' progress. The company uses performance management software which can quickly recognize those who are performing well or expose those who are not. The company was proud of its low turnover, but now turnover is twice of what it was a decade ago. The company doesn't view this as a problem because the culture changed. These changes are designed to help the company generate more revenue and profit. Companies are moving away from annual performance reviews to continuous oversight and feedback. The goal is to create continuous improvement. Software lets managers track the progress of workers with dashboards that display goals, accomplishments, attendance, peer feedback and other data. The performance culture which requires setting goals and holding workers accountable seems to result in faster growth, higher profitability and a lower likelihood of bankruptcy. Change can be difficult at a company like Kimberly-Clark because it requires a cultural shift.

CLASSROOM APPLICATION: Instead of focusing on the financial performance of a company, this article focuses on the role of culture and management. As times changed, Kimberly-Clark changed its culture. The company had low turnover because employment was for life. The company had to change to become more competitive. The company now tracks, evaluates and communicates with employees using performance management software. The company culture was paternalistic and avoided conflict. Like many other large companies, Kimberly-Clark moved from annual performance reviews to continuous reviews. The company made changes beginning in 2008. It now recognizes the relationship between its human-resource innovations and the stock price. Changes in human resources practices are mostly invisible to analysts and investors. Other factors including lower commodity prices, cost-cutting and growth in emerging markets also likely explain performance. The company no longer promises employment for life and has reduced its workforce by 2,900. The company has gone from a conflict-averse culture to one where "I care enough to tell you the truth."

QUESTIONS:
1. Explain in detail what the term "corporate culture" means?

2. Describe the culture at Kimberly-Clark prior to the changes it instituted starting in 2008.

3. Review the characteristics of performance management software and how it is used at Kimberly-Clark to improve employee performance.

4. How would you describe the current culture at Kimberly-Clark?

5. Why do you think many larger companies are using or plan to use performance management software?

Corporate Culture Change at Kimberly Clark

Diaper and tissue maker shifts from a paternalistic company to one focused on pushing workers to constantly improve, closely tracking progress and shedding laggards

Not long ago, when Kimberly-Clark Corp. employees gathered for interdepartmental meetings, they prefaced their comments with their names and years of service at the company.

These days, “no one cares,” said Scott Boston, vice president of human resources. The attitude in meetings is “ ‘let’s get moving,’ ” he said.

For generations, having a job at Kimberly-Clark meant having a job for life. The maker of household products such as Huggies and Kleenex paid its employees above-market salaries and avoided layoffs.

Even low performers rarely felt pressure. “A lot of people could and would hide in the weeds,” said Rick Herbert, a sales director who retired in 2014 after more than three decades with Kimberly-Clark.

That’s over. One of the company’s goals now is “managing out dead wood,” aided by performance-management software that helps track and evaluate salaried workers’ progress and quickly expose laggards. Turnover is now about twice as high it was a decade ago, with approximately 10% of U.S. employees leaving annually, voluntarily or not, the company said.

Armed with personalized goals for employees and large quantities of data, Kimberly-Clark said it expects employees to keep improving—or else. “People can’t duck and hide in the same way they could in the past,” said Mr. Boston, who oversees talent management globally for the firm.

It has been a steep climb for a company that once resisted conflict and fostered a paternalistic culture that inspired devotion from its workers.

The changes mirror what is happening inside many large companies, where “performance management” reflects the conviction that a sharpened focus on creating a high-performing workforce is a vital tool to generate revenue and profit.

Some of Kimberly-Clark’s best-known products are decades old, including Kotex sanitary napkins, above in 1949, Kleenex tissues and Huggies diapers. Photo: Kimberly-Clark

In the past year, firms including Accenture PLC and General Electric Co. have dropped annual performance reviews in favor of more continuous oversight and feedback from managers, all meant to drive constant improvement.

Coca-Cola Co. in June approved pushing its new performance-management process from the pilot stage to a global rollout. The new system encourages managers to conduct a monthly “reflection” on every direct report, answering five questions that include “Given his/her performance, would you assign this associate to increased scale, scope, and responsibilities?” and “Is this associate at risk for low performance?”

Adobe Systems Inc., which was one of the first big companies to home in on performance management, scrapped its annual review in favor of frequent “check-ins” in 2012.

Performance management shifts companies away from backward-looking, once-a-year reviews framed largely as compliance requirements—a paper trail for potential job cuts and salary decisions—to a process that is real-time, continuous and focused on helping people meet ambitious goals, or move out of the company faster.

The last recession led many employers to rethink the nearly automatic merit raises they had been doling out, forcing them to do a better job identifying high and low performers when giving raises and bonuses. Millennial workers, meanwhile, demand more feedback, more coaching and a stronger sense of their career path.

Companies spend $14 billion a year on products to help manage employees, including human-resources software from Workday Inc., SAP SE ’s SuccessFactors and Cornerstone onDemand Inc., with about $2 billion of that dedicated to performance management, according to human-resources advisers Bersin by Deloitte.

Those systems let managers track workers’ progress via dashboards that display their goals, accomplishments, attendance, peer feedback and other data.

The company was founded in 1872 by Charles B. Clark, Frank C. Shattuck, Havilah Babcock and John A. Kimberly, clockwise from top left. It initially specialized in top-quality newsprint. Photo: Kimberly-Clark

Executives’ use of phrases like “performance culture” in conference calls with analysts and investors has doubled in the past five years, according to a review of transcripts in the Factiva news database. Firms that set goals and hold workers accountable “clearly outperform,” said Nicholas Bloom, an economist at Stanford University and co-author of a recent paper that used Census data to examine more than 32,000 U.S. manufacturing plants. He said they have faster growth, higher profitability and are less likely to go bankrupt.

Some academics say constant monitoring can feel intrusive and threatening to workers, especially those who value stability. But human-resources experts largely agree that the traditional review process is a waste of time and needs an overhaul.

The shift to a performance focus, which requires consistent oversight and sometimes uncomfortable feedback, can be bumpy.

At Kimberly-Clark, CEO Tom Falk—himself a 33-year veteran—pushed the Dallas-based company onto its new course. “We all talk about how having the best team is the most important difference-maker in your results,” said Mr. Falk, who became chief in 2002. “But we didn’t have the supporting processes to make that sustainable.”

In 2008, with the company’s shares stagnant, few innovations in the pipeline and a belief that costs were bloated, the CEO added human-resources executives to the team putting together the firm’s long-term business plan for the first time.

Holding workers close through good times and bad is “not sustainable” any more, said Liz Gottung, the company’s human-resources chief. “If you look at when we started implementing the big pieces of the company’s people strategy, when you map that to our stock price and our business results, you can see the clear correlation.”

Shares closed at a high of $138.13 in April, and its quarterly dividend, which it has raised every year for more than four decades, hit a high of 92 cents a share in February. The share price has more than doubled since 2008.

Engineers in 1948 worked on product development at a company mill in Neenah, Wis. Photo: Kimberly-Clark

Behind-the-scenes changes to human-resources practices are largely invisible to analysts and investors. Analysts attribute Kimberly-Clark’s rising stock price to declining commodity prices, aggressive cost-cutting, growth in emerging markets and a generous dividend payout.

Big cuts

Since 2009 Kimberly-Clark has laid off around 2,900 mostly salaried workers world-wide, some of the first big cuts in the company’s 144-year history. It currently employs about 43,000.

Remaining employees are expected to work “smarter” and meet regularly raised targets. “We have to routinely shuffle the resources and say, what’s the most important thing we need to do today, this week, this month, to drive this objective?” said Stephanie Martin, an engineer who analyzes new product ideas.

Using the Workday tool, Kimberly-Clark’s salaried employees set goals and report their progress, record accomplishments or mistakes, and solicit and send feedback. (Hourly workers don’t use the system.)

The system collects and archives feedback, which can be seen by employees’ managers. It also holds data on staffers’ strengths and development needs, their performance ratings and the risk they might leave the company.

“It’s certainly more challenging” for employees, said Mr. Herbert, the retired sales director. “If you really don’t have the mettle, you’re asked to get on with your life’s work [elsewhere].”

In 2015, Kimberly-Clark retained 95% of its top performers. Among the employees whose work was rated “unacceptable” or “inconsistent,” 44% left the company voluntarily or were let go. Ms. Gottung said she is “pretty pleased” that low-performer turnover has been rising.

Retired sales manager Jeanne Sanders remembers executives boasting about the firm’s low turnover when she interviewed at Kimberly-Clark in 1987. Stories are told about how during the Depression and in more-recent production interruptions, mill managers reconfigured shifts to avoid layoffs.

These days, leadership has communicated to employees that turnover is a good thing, said Chris Luettgen, a senior research manager who left in 2014 to join the engineering faculty of Georgia Tech. “I saw it as a good move in that we could get some new thinking and innovation into our pipeline,” he said.

Mr. Falk, the CEO, reviews 100 senior managers’ performance plans every year to make sure their goals are ambitious and reflect company priorities. Managers are instructed to begin every meeting with a story about how someone demonstrated one of the six behaviors the company promotes, such as “build trust” or “think customer.”

Training sessions

Regular “culture of accountability” sessions train employees in giving and receiving difficult feedback. When a colleague suggests improvements, “the proper response was ‘thank you for the feedback,’ not defensiveness,” Mr. Luettgen said. Employees also practice reinforcing positive behaviors, such as praising a colleague who had given up a weekend to solve a customer complaint.

More than 10,000 of Kimberly-Clark’s workers used the feedback feature in Workday in 2014, and about 25% of the comments were considered “constructive,” while the rest were positive or neutral, said Sandy Allred, a senior director on the talent management team. Staffers can send feedback to peers or workers above or below them.

Making paper for Scott paper towels at the company’s Chester, Pa., mill in 1917. Photo: Kimberly-Clark

An earlier, unpopular system required managers to rank employees in a nine-box grid according to strict percentages, and then put the lowest performers on mandatory performance improvement plans, often the first step to a termination. In 2013, the company switched to the current, more-flexible system, which uses four ratings, with percentages that are suggested for each rating.

Around that time the company trimmed some salaries and put more workers on a bonus plan, to tie pay more closely to performance.

Dave Bernd, a 33-year veteran whose father was a senior executive at the company, said that when he walked on the Roswell, Ga., corporate campus a few months ago he found the old warmth missing. “It doesn’t feel like the family it once was.”

The former manufacturing director, who retired in 2013, said a decade ago, “whether you knew anyone or not,” employees said hello in the parking lot and engaged in camaraderie typical of a smaller company. Even so, he said he approves of the recent management changes.

One of the firm’s core values is still “caring,” said Ms. Gottung, who joined Kimberly-Clark in 1981. “When I started with the company, we were very conflict-averse, very oriented towards consensus,” she said. “And now it’s ‘I care enough about you to tell you the truth.’ ”

CEO Tom Falk, left, at a volunteer event to clean donated furniture, electronics and appliances for needy families in Ventura, Calif., in April. Photo: Michael Kovac/Getty Images for Viva (Kimberly-Clark)

One former employee said he was initially glad that the company was identifying those who weren’t pulling their weight. Then, after earning top reviews over his decadeslong career, he said he was given a low rating and placed on a performance-improvement plan after missing a project deadline. After that, “no one would talk to me” about other positions, he said.

He said the situation eventually improved with a new supervisor, but he still decided to leave the company last year.

In that instance, “did the system work or not? I don’t know,” said Ms. Gottung. With thousands of performance reviews happening every year, “I wish we had 100% satisfaction, but that’s unrealistic. Overall, our employees think this is a fair and equitable process.”

Basma Osman a 27-year-old product-development engineer, considers herself a beneficiary of the new system. Tapped early in her career as a high-potential employee, she was working on health and wellness products but told her manager she was interested in industrial safety. He soon asked her to oversee a $30 million project in that area. “I was terrified,” she said, but she was also grateful that her manager “understood what I wanted and what I’m good at.”

Prepare a Project Proposal that includes the nature of the project, the sources of information you plan to use, and the most important concepts and techniques to be applied.

The outline topics should include the following:

A brief summary of the company you have chosen, such as business lines, and its industry;
Information sources (e.g. industry studies, market share reports, financial statements, etc.);

The analyses you will include in your study. This will likely require a summary review of the material in later sections of the course, such as competitor analysis;

If you have access to, and permission to use, internal company documents, please discuss so in the outline.

You are required to complete a course project that reveals mastery in application of the strategic managerial accounting and performance management concepts emphasised in the course. This involves reporting on a specific organisation within an industry, analysing the firm’s competitive position (e.g., market position, cost competitiveness, market power, innovation, SWOT, etc.), its managerial accounting approach, and the non-financial performance metrics should be used in monitoring firm performance, all aligned with value creation for the chosen firm.

This project should be a formal business report that covers all elements of the strategic management process: mission statement, strategic goals, strategic objectives, actionable plans (if available, analyse the specific budget planning process used by the Firm; if not, search for relevant articles for the subject company and recommend a process that you believe is appropriate for the company), and performance monitoring processes employed by the Firm, including its board of directors. These processes and strategies are to be supported with managerial accounting and performance management concepts.

In selecting a company to analyze, first focus on information availability. If you work for the company, ensure that you can obtain the information required to do a proper job on this assignment. If you choose a company you do not work for, begin your search among larger public companies with ample information available. Company websites are often the best place to begin, in particular the investor relations site. Look for annual reports, quarterly reports, press releases, white papers, and other sources of information (e.g., public filings, such as for the U.S. Securities & Exchange Commission at http://www.sec.gov./

Your tasks are to:

· Briefly describe the business of the Firm (i.e. industry segments, geographic service area, market position, and size as measured by revenues, employees, and market capitalisation). Describe the mission statement and strategic objectives of the Firm.
· Analyse the behaviour of expenses of the business, distinguishing between variable costs and fixed costs (or estimates thereof), describe the relationships between sales volume, costs, and profit. Estimate a break-even point for the Firm and support with relevant calculations and discussion.

· Discuss the level of the Firm’s operating leverage.

· Assess the budgeting process and procedures for the Firm, bearing in mind the context of the business and its characteristics. Identify methods employed for budgeting, managerial reporting, and control, and make recommendations for improvement. Justify your recommendations.

· Summarise the Firm’s performance over the past five years in terms of sales and earnings growth, return on equity, return for shareholders, and non-financial performance measures (e.g. market share, recognition, customer satisfaction).

· Analyse the fixed capital needs (i.e. capital expenditures) of the company, and discuss significant capital projects, how they fit with the strategic goals of the Firm. Evaluate risks associated with major capital projects and suggest risk mitigation strategies. Justify your suggestions.

· Briefly profile two or three key competitors and analyse the basis for competition (e.g., is it cost? Innovation? Capital intensity? Branding?). Compare the Firm with these key competitors on key performance metrics (e.g., revenue growth, profit margins, return on equity, financial leverage, receivables turnover, payables turnover, asset turnover, operating costs, market share, market share growth, etc.). Identify areas where the Firm may outperform or underperform the peer group, and suggest improvements for weaknesses.

· Design a Balanced Scorecard for the Firm.

This project should follow a structured approach and should be prepared and presented as a professional business report.

Business management

QUESTION 1

1. Which of the following outlines the organization's purpose, assumptions, values, and direction?

   		Mission
   		Purpose
   		Strategic plan
   		Strategic goal
   		Tactical goal

2 points

QUESTION 2

1. Scientific management focuses on

   		improving the efficiency of the individual worker.
   		managing the overall organization.
   		using capital more efficiently.
   		enhancing the social aspects of the workplace.
   		creating mathematical models of organization processes.

2 points

QUESTION 3

1. The idea that manufacturing costs per unit decrease as the number of units produced increases is known as

   		economies of scale.
   		venture capitalism.
   		a franchising agreement.
   		first-mover advantage.
   		None of these.

2 points

QUESTION 4

1. The component of strategy that indicates how the organization intends to allocate resources is

   		resource deployment.
   		scope.
   		competitive advantage.
   		synergy.
   		None of these.

2 points

QUESTION 5

1. The process of choosing one alternative from among many alternatives is called

   		satisficing.
   		problem solving.
   		bounded rationality.
   		decision making.
   		None of these.

2 points

QUESTION 6

1. Mercedes-Benz sells high quality automobiles at high prices. It uses a(n)

   		differentiation strategy.
   		low-cost strategy.
   		diversification strategy.
   		related diversification strategy.
   		BCG strategy.

2 points

QUESTION 7

1. Which of the following is NOT generally considered to be a role performed by small businesses?

   		Creation of new jobs
   		Development of new products
   		Manufacture of materials for large businesses
   		Distribution of products made by large businesses
   		Provision of capital for expansion of large businesses

2 points

QUESTION 8

1. Which of the following is a disadvantage of group decision making?

   		More alternatives are likely to be generated.
   		More information will be brought to bear on the problem.
   		More time will be needed to make the decision.
   		More communication about the decision will result.
   		All of these.

2 points

QUESTION 9

1. Which of the following is an example of an owner of a business?

   		Individual investors who buy stock in that business
   		Partners
   		People who have legal property rights to that business
   		Individuals who finance and start up a new business
   		All of these.

2 points

QUESTION 10

1. The best alternative is the most ____ alternative.

   		efficient
   		controllable
   		profitable
   		effective
   		valid

2 points

QUESTION 11

1. Which of the following decision-making models is based on the belief that human behavior is often imperfect?

   		Rational
   		Emotional
   		Classical
   		Behavioral
   		Sequential

2 points

QUESTION 12

1. A disadvantage of using interacting groups to make decisions is

   		group politics.
   		a void of expert opinion.
   		an increase in programmed costs.
   		faster decision making.
   		too much brainstorming.

2 points

QUESTION 13

1. Nokia and Samsung make cell phones that operate on the Microsoft system. They operate in the ____ industry.

   		transportation
   		manufacturing
   		retailing
   		services
   		wholesaling

2 points

QUESTION 14

1. All of the following are advantages of group decision making EXCEPT

   		groupthink may occur.
   		better decisions generally emerge.
   		enhanced communication may result.
   		more information and knowledge are available.
   		None of these.

2 points

QUESTION 15

1. Facebook operates in which industry?

   		Construction
   		Wholesaling
   		Manufacturing
   		Services
   		All of these.

2 points

QUESTION 16

1. Four friends home from college want to start a moving business to earn money during the summer. To determine whether this is a good idea, they need to find the answer to which of the following questions?

   		Who are my customers, and where are they?
   		Who are my competitors, and where are they?
   		How can I differentiate my product from that of my competitors?
   		In what quantities and at what price will my customers buy my service?
   		All of these.

2 points

QUESTION 17

1. The classical management perspective consists of

   		scientific management and administrative management.
   		management science and scientific management.
   		behavioral management and the operations management.
   		contemporary management and behavioral management.
   		contingency management and universal management.

2 points

QUESTION 18

1. Which of the following persons is a manager?

   		Cardinal Timothy Dolan, Archbishop of New York
   		Nick Saban, football coach at the University of Alabama
   		Linda Kaplan Thaler, chief creative officer of Kaplan Thaler Group
   		Marissa Mayer, CEO of Yahoo
   		All of these.

2 points

QUESTION 19

1. Organizations that provide resources to other organizations are known as

   		suppliers.
   		competitors.
   		regulators.
   		interest groups.
   		importers.

2 points

QUESTION 20

1. A(n) ____ strategy requires little initial investment, is heavily regulated, and provides little opportunity to modify products for local conditions.

   		importing/exporting
   		licensing
   		joint venture
   		direct investment
   		global sourcing

2 points

QUESTION 21

1. All of the following are included in the task environment of organizations EXCEPT

   		competitors.
   		customers.
   		regulators.
   		suppliers.
   		the economy.

2 points

QUESTION 22

1. "Decision making under risk" means the decision maker

   		has no data on which to base his or her decision.
   		is risk-averse, avoiding risky investments.
   		knows all the risks involved in the decision.
   		can estimate decision data with some probability.
   		is making an important decision with long- term consequences.

2 points

QUESTION 23

1. A standing plan that outlines the steps to be followed in a particular circumstance is called a(n)

   		SOP.
   		single-use plan.
   		policy.
   		contingency plan.
   		program.

2 points

QUESTION 24

1. Which of the following is NOT one of the reasons for new business failure described in your text?

   		Sufficient capital
   		Incompetence
   		Neglect
   		Weak control systems
   		Inexperience

2 points

QUESTION 25

1. Interpersonal skills enable managers

   		to take an overall view of how the parts of the organization interrelate and to think strategically.
   		to solve detailed problems for their subordinates.
   		to understand and interact effectively with others in the organization.
   		to diagnose organizational problems correctly.
   		None of these.

2 points

QUESTION 26

1. Herbert Simon noted that managers generally fail to make rational decisions because they are limited by their own values, skills, habits, and unconscious reflexes as well as by incomplete information. What name did Simon give this phenomenon?

   		Satisficing
   		Bounded rationality
   		Brainstorming
   		Rational decision making
   		Decision framing

2 points

QUESTION 27

1. Nike and Reebok are best described as

   		strategic allies.
   		competitors.
   		customers.
   		regulators.
   		suppliers.

2 points

QUESTION 28

1. The first person to identify the managerial functions of planning, organizing, leading, and controlling was

   		Elton Mayo.
   		Lillian Gilbreth.
   		Henri Fayol.
   		Hugo Munsterberg.
   		Mary Parker Follett.

2 points

QUESTION 29

1. Strategic goals are set by

   		first-line managers.
   		middle managers.
   		top managers.
   		stockholders.
   		All of these.

2 points

QUESTION 30

1. Using the BCG matrix, SBUs are classified on the basis of

   		market growth rate and cash generation potential.
   		market share and market growth rate.
   		competitive advantage and financial strength.
   		a strategic business unit and product life cycle.
   		None of these.

2 points

QUESTION 31

1. ____ skills are needed for specialized tasks within the organization.

   		Human
   		Organizational
   		Conceptual
   		Technical
   		None of these.

2 points

QUESTION 32

1. McGraw Hill operates in publishing and construction. This is an example of ____ diversification.

   		differentiation
   		unrelated
   		single-product
   		BCG
   		related

2 points

QUESTION 33

1. The management pioneer who performed the Hawthorne studies at Western Electric was

   		Lillian Gilbreth.
   		Elton Mayo.
   		Henry Gantt.
   		Frank Gilbreth.
   		Frederick Taylor.

2 points

QUESTION 34

1. An organization's obligation to protect and enhance the society in which it operates is called

   		legal responsibility.
   		ethical responsibility.
   		social responsibility.
   		cultural responsibility.
   		societal responsibility.

2 points

QUESTION 35

1. An entrepreneur does all of the following EXCEPT

   		operate.
   		organize.
   		plan.
   		assume risk.
   		hire a professional manager.

2 points

QUESTION 36

1. The primary purpose of the management process is to

   		develop organizational goals and make logical decisions.
   		organize the various functions in a logical manner.
   		ensure that all employees are working together effectively.
   		achieve organizational goals efficiently and effectively.
   		make sure things go as planned.

2 points

QUESTION 37

1. How do top managers spend most of their time?

   		Overseeing day-to-day operations
   		Routine administrative tasks
   		Implementing plans of first-line managers
   		Making decisions and creating goals
   		Coordinating the work of first-line managers

2 points

QUESTION 38

1. In the classical decision making model, "optimization" means

   		implementing two or more alternatives simultaneously.
   		choosing the alternative with the best overall expected outcomes.
   		gathering the most complete information before making the decision.
   		reaching a satisfactory level of performance.
   		None of these.

2 points

QUESTION 39

1. A written summary of the business strategy and its implementation plan is known as

   		a niche summary.
   		a first-mover advantage.
   		a business plan.
   		economies of scale.
   		a franchise agreement.

2 points

QUESTION 40

1. The aspects of a business that the firm performs at a higher level than its competitors are known as the firm's

   		niches.
   		capital-intensiveness.
   		distinctive competencies.
   		strategic weakness.
   		first-mover advantage.

2 points

QUESTION 41

1. For a Perkins restaurant, which of the following would be considered to be a supplier?

   		A family of 5
   		Wendy