Robert L. Simons, Natalie Kindred
Finance & Accounting
This case illustrates a CEO-led organizational transformation driven by stretch goals, performance measurement , and accountability. When Kasper Rorsted became CEO of Henkel, a Germany-based producer of personal care, laundry, and adhesives products, in 2008, he was determined to transform a corporate culture of “good enough” into one singularly focused on winning in a competitive marketplace. Historically, Henkel was a comfortable, stable place to work. Many employees never received negative performance feedback. Seeking to overturn a pervasive attitude of complacency, Rorsted implemented a multi-step change initiative aimed at building a “winning culture.” First, in November 2008, he announced a set of ambitious financial targets for 2012. As financial turmoil roiled the global economy, he reaffirmed his commitment to these targets, sending a clear signal to Henkel employees and external stakeholders that excuses were no longer acceptable. Rorsted next introduced a new set of five company values-replacing the previous list of 10 values, which few employees could recite by memory-the first of which emphasized a focus on customers. He also instituted a new, simplified performance management system, which rated managers’ performance and advancement potential on a four-point scale. The system also included a forced ranking requirement, mandating that a defined percentage of employees (in each business unit and company-wide) be ranked as top, strong, moderate, or low performers. These ratings significantly impacted managers’ bonus compensation. In late 2011-the time in which the case takes place-Henkel is well on its way to achieving its 2012 targets. Having shed nearly half its top management team, along with numerous product sites and brands, Henkel appears to be a leaner, more competitive, “winning” organization.
Change management, Collaboration, Executive compensation, Financial analysis, Organizational culture, Performance measurement, Personnel policies, Social responsibility, Strategy execution, Work-life balance
Michael E. Porter, Elizabeth Olmsted Teisberg
Strategy & Execution
The Cleveland Clinic’s health care services are internationally renowned for quality. In 2008, The Clinic began to restructure the organization into teams defined around patient needs, rather than traditional medical specialties.”Patients First! takes shape as the teams measure and report outcomes, coordinate care, and develop to support improving value for patients. In addition to restructuring care delivery in the hospitals and throughout northeastern Ohio, The Clinic has investments, facilities, and staff in several other states in the U.S. as well as in Canada and Abu Dhabi. Now in 2015, as the Clinic’s domestic and international footprint continues to expand, its leadership is also focused in maintaining the Cleveland Clinic brand and providing optimal clinical care. Students can explore strategy transformation, geographic expansion, the process of introducing new measurement approaches, alignment of activities with strategic goals, and issues in leading change both within a company and across an economic sector.
Growth strategy, Health, Leadership, Performance measurement, Personnel policies
Janice H. Hammond, Gary P. Pisano
Technology & Operations
Applichem manufactures the same chemical product in four plants, each of which is located in a different country. The company has completed a major study comparing the productivity and performance of these plants. Using the data from the study, students must decide which, if any, plants to close. The case requires students to think about the relevant metrics for comparing the performance of plants that operate very differently and in different countries. An important issue is the distinction between physical measures of productivity and financial measures of performance. Finally, the case allows students to think about what management might do to ensure that productivity improvements are shared across the plant network.
Operations management, Performance measurement, Productivity
Scott A. Snook, Jeffrey T. Polzer
Leadership & Managing People
The coach of the varsity Army crew team at West Point assembled his top eight rowers into the first crew team and the second tier of rowers into the second team using objective data on individual performance. As the second boat continually beat the first boat in races, the coach attempted to discern the team dynamics causing these aberrant results. By using very clean, objective performance data, the case makes clear that a team can be more (or less) than the sum of its individual parts, but allows students to analyze the factors that make this true.
Conflict, Leadership, Leading teams, Performance measurement