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
Amy C. Edmondson, Kathryn S. Roloff
Leadership & Managing People
When interpersonal risks loom large in the moment, human beings often fail to act in their own or in their organization’s best interest. When uncertainty clouds peoples’ tentative thoughts and views – views that may be at odds with those of others’ – they often take the path of ‘reduced interpersonal resistance’ to avoid conflict and confrontation. This can happen when a lot is at stake (a patient’s health, an aircraft’s safety, a costly takeover) and when not much is at stake (a small improvement idea is not communicated to the individual who could act on it). Either way, the silence, along with the incomplete thoughts that lie behind it, inhibits team learning in organizations that depend upon such learning for their ongoing viability. As a result, in virtually every organization, failed collaboration occurs countless times throughout the day, usually without much conscious attention. Diversity of three particular types exacerbates these tendencies. The authors explain how ‘psychological safety’ can enable team diversity to be better and leveraged, allowing a team to reap the benefits associated with diverse sets of skills, experience, knowledge and backgrounds in ways that would not be possible if team members were unwilling to take the risks associated with speaking up.
Diversity, Leadership, Personnel policies