The list below includes some of the organizations that have become (or are on the journey to becoming) empowered and adaptive organizations. It also shows the diversity of the group across industries and cultures.
|Organization||Industry||Country of Origin|
|Amrican Express||Financial Services||USA|
|Beth Israel Deaconess Medical Center||Health Care||USA|
|dm drogerie-markt||Drug retail||Germany|
|Egon Zehnder Inernational||Executive recruitment||Switzerland|
|W.L. Gore & Associates||Multi-products manufacture||USA|
|Guardian Industries||Float glass manufacture||USA|
|HCL Technologies||IT Services||India|
|John Lewis Partnership||Retail||UK|
|Leyland Trucks||Truck manufacture||UK|
|Nucor Steel||Steel maker||USA|
|Statoil||Oil & Gas||Norway|
|Sydney Water||Water utility||Australia|
|Whole Foods Market||Natural foods retailer||USA|
Let’s now look at three organizations that have adopted different performance management systems and examine briefly how they have broken free from the coils of the fixed contract and enabled their people to continuously improve the business. What is perhaps surprising about them is that not only are they in three different industries, but their headquarters (and thus corporate cultures) are based on three different continents (Asia, Europe and North America). They are Japanese car manufacturer, Toyota; Swedish bank, Svenska Handelsbanken; and U.S. airline, Southwest Airlines. Not only are they nimble and simple organizations but their performance management models are strikingly similar. And their performance records have been outstanding not just last year, or the year before, but for over thirty years.
Toyota – A World Class manufacturing model
Despite incurring its first loss in many decades (not even Toyota can make a profit when the market suddenly collapses by over 30 percent) Toyota remains the best managed manufacturing company in the world. Its Toyota Production System is legendary and spawned the lean manufacturing movement. The management focus is on continuously improving systems and meeting internal and external customers’ needs. Everyone has a voice and is expected to contribute to the continuous improvement of their work. Medium-term operational goals aimed at best practice are set at every level. Planning takes place at the plant/team level and happens monthly within a clear strategic framework (12 month rolling forecasts support capacity planning). Knowledge about current performance is visual and immediate (e.g. throughput, downtime, inventory levels). Resources are made available just-in-time to meet each customer order. There are no fixed targets, no annual budget contracts and people are trusted with information to make the right decisions.
Handelsbanken – A World Class financial services model
Like Toyota, Handelsbanken has been consistently profitable for over 30 years. It is also consistently top of independent customer satisfaction ratings in Sweden and the UK and has the lowest number of customer complaints. It is consistently one of the most cost efficient banks in the world with a cost-to-income ratio of around 40 percent (compared with 60-80 percent for most of its rivals). Its profits even increased in 2008 when other banks were suffering huge falls and it has come through the credit crunch relatively unscathed (it was the only Swedish bank not to require Government support).
The focus is on continuously improving performance and meeting customers’ needs. There is no fixed performance contract to worry about. The pressure comes from not letting down the team you are in or the regional group you are part of. Branches are profit centres and have considerable decision-making authority. Goals are self-imposed by branch teams aimed at improving against peers. But these are not communicated to a higher authority - they are not a contract. There are no top-down targets. Planning takes place at the branch level, usually at six-to-twelve week intervals according to the needs of the branch. There are only a few metrics that tell managers how they are performing (return-on-equity and cost/income ratio at group and regional levels and cost/income ratio and profit per employee at branch level). Information is fast and open. Peer comparisons are used to spur improvement. Resources are made available through an internal market that enables branches to access them at any time. This approach drastically reduces waste and costs.
Southwest Airlines – A World Class airline model
Southwest is an icon of Corporate America. It has been consistently profitable for over 30 years and is regularly top of independent customer satisfaction ratings. It is also the most cost efficient airline and has the highest shareholder returns of its peer group. It has been voted one of best “corporate citizens” in America. The focus is on continuously improving performance and meeting customers’ needs. Service is a “way of life” rather than a technique.
Targets are set by each team within broad-based parameters and expectations.
This enables innovative thinking and builds ownership and commitment at the
local level. Benchmarks (such as cost per available seat mile) and other key
indicators are widely shared.
Planning takes place at the front line. It is a continuous process based on 12-month rolling forecasts and quarterly plans within a clear strategic framework. Managers have fast, relevant information within one unified reporting and open information system. Resources are made available monthly and quarterly based on rolling forecasts. Action plans can be approved at any time through the year and implemented immediately.