Professional Documents
Culture Documents
Employee OWNERSHIP and Accountability
Employee OWNERSHIP and Accountability
Lynn Takaki
Lynn Takaki is Vice President of Human Resources, Precor Inc., Woodville, Washington, USA. www.precor.com
Abstract Purpose It is well recognized that fast-growing companies can outpace their systems and infrastructure. Similarly, rapidly growing companies can outgrow their corporate culture. This case study aims to address training that replaces an established yet outgrown corporate culture with a dynamic culture suitable for the growing organization. Design/methodology/approach Global tness equipment leader Precor has achieved cultural change through a strategy founded in increasing and rewarding personal accountability for results. Through training, Precor established direct connections between each employee and the corporations nancial performance. A system of ongoing communications and rewards supports the change over time. The process included institutionalized and depth delivery of company-wide communications, performance management processes, and reward-and-recognition programs. Findings Through training, an organization can successfully transition individuals and departments to embrace a culture of personal ownership, accountability and reward. Financial benets also accrue: since Precor committed to organizational change, corporate revenues have increased by more than 50 percent, and protability is up more than 200 percent. Practical implications Management can institutionalize a culture of personal ownership and accountability that generates superior nancial results. Originality/value Human resources and training executives interested in signicantly increasing their organizations business results can gain insight into building employee accountability and individual links and ownership of their companys results. Keywords Management accountability, Employee accountability, Organizational culture, Employee involvement Paper type Case study
Precor has a history of entrepreneurial success, but we werent satised with staying in place. Our ability to step up to the next level, to achieve our objectives and potential, required that we transform our culture to focus on a results-oriented, high performance culture. We needed to put in place a structure that articulates what we were trying to achieve to put the entire team on the same page, dene our culture and enroll our employees to be part of that (Paul Byrne, Precor president).
DOI 10.1108/00197850510593755
VOL. 37 NO. 3 2005, pp. 145-149, Q Emerald Group Publishing Limited, ISSN 0019-7858
PAGE 145
The Precor story is one of growth, change and transformation of a company that originated in a garage, and is entering its early adult years. From the outside, the Precor story appears to be one of progressive evolution and development. Whats less apparent is that as Precor entered its third decade with big business goals, the company in many ways was operating as a small business. Externally there was evidence of great change, including a stair-stepping series of line expansions and market growth in the 1980s and 1990s. Further, a major initiative in the late 1990s by Precors former parent, Illinois Tool Works (ITW), transformed Precor manufacturing into a world-class lean manufacturing operation. A global leader in lean manufacturing, ITW pared Precor manufacturing to core activities through outsourcing, workforce reduction, and investment in production technology and processes. Entering 2000, Precor had nely tuned its production operations, and generated an unprecedented string of double-digit increases in annual revenues and protability. New leadership also began outlining a vision for Precor that extended beyond traditional tness equipment, to a total product offering of products and services leveraging technology.
. . . Even those who did recognize general objectives of revenue, prot and service were unable to articulate how their individual role and performance related to corporate results in any way.
Similarly, it was essential that Precor formalize a framework of behaviors and processes that drive personal accountability, and establish the direct connection between an individuals performance and Precors success in accomplishing its corporate objectives.
In addition to building the case for change and creating a culture of accountability, the Precor senior management team developed strategies for content and principles to extend and sustain changes in the organization. Systems to improve employee communications, recognize ownership for results, and support and reinforce accountability throughout the company were created, or revised to align with the new framework of organizational values. Additionally, building new skill sets took on a major focus, beginning with a company-wide training program on basic business nance and strategies. Through a simulation/game-playing training program created by Paradigm Learning, teams of employees tried their hand at buying and running a company. In training sessions in which Precor employees manufactured and delivered products, they also confronted a variety of business challenges presented by suppliers, customers, banks and customers. They also experienced every aspect of the nancial process, from collecting receivables and paying bills to making decisions that illustrated business principles such as cash ow, return on equity and cost of good sold. Though this role-playing process, Precor dramatically increased employee understanding from a CFOs perspective, featuring skill sets valued by management, and reinforcing how each individuals performance impacts the bottom line.
While organizational change advanced, it was inevitable that in some cases change would encounter pockets of denial or resistance particularly in areas that had experienced the greatest success.
A similar structure was developed for work-group performance, with well-dened and visible performance targets reviewed monthly. Additionally, Precor continues to focus on building nancial skills and individual awareness of ones impact on the bottom line.