Robert Simons

Charles M. Williams Professor of Business Administration

Bob Simons is the Charles M. Williams Professor of Business Administration at Harvard Business School. Over the last 30 years, Simons has taught accounting, management control, and strategy implementation courses in both the Harvard MBA and Executive Education Programs. During 2014/2015 he is teaching a second-year MBA course, "Designing Competitive Organizations," a module in the Owner/President Management Program, and "Driving Corporate Performance," a program for financial executives and general managers.  A book based on this work, Seven Strategy Questions: A Simple Approach for Better Execution, was published in 2010 by Harvard Business Press.

Simons' previous book, Levers of Organization Design, was published by Harvard Business School Press in 2005. In addition, he has written two other books. The first, Levers of Control (HBS Press, 1995), describes how effective top managers balance innovation and control. This book won the Notable Contribution to Management Accounting Literature award. Simons' other book, Performance Measurement & Control Systems for Implementing Strategy (Prentice-Hall, 2000), provides an integrated set of accounting-based techniques for implementing strategy.

In addition to his books, Simons' ongoing research into the relationship between business strategy, organization design, and management control systems has been published in journals and books such as Capitalism and Society, Harvard Business Review, Sloan Management Review, Strategic Management Journal, Accounting, Organizations and Society, Contemporary Accounting Research, Accounting and Management: Field Study Perspectives, and Journal of Accounting Literature. His articles in Harvard Business Review include "Choosing the Right Customer" (March 2014), “Stress-Test Your Strategy” (November 2010), "Managing Risk in the New World" (October 2009), "Designing High-Performance Jobs" (July 2005), "How Risky is Your Company?" (April 1999), "How High is Your Return on Management?"(January 1998), and "Control in an Age of Empowerment" (March/April 1995).

A Canadian Chartered Accountant, Simons earned his Ph.D. from McGill University. Simons has served as a consultant to a number of corporations on strategy implementation, organization design, performance measurement, and strategic control. He has testified as an expert witness in U.S. Federal Court and before State Public Utility Commissions.

Most Recent Publications

  1. Henkel's CEO Kasper Rorsted: On Building a Winning Culture

    Keywords: performance measurement; performance appraisals; human resource management; work/life balance; strategy execution; values; organizational transformations; pay for performance; Values and Beliefs; organizational culture; Performance Evaluation; Compensation and benefits; Organizational Change and Adaptation; Values and Beliefs; Work-Life Balance; Organizational Culture; Performance Evaluation; Compensation and Benefits;

    Citation:

    Simons, Robert L. "Henkel's CEO Kasper Rorsted: On Building a Winning Culture." Harvard Business School Video Supplement 114-703, October 2013. (Revised October 2013.) View Details
  2. Atlanta Schools: Measures to Improve Performance

    The widespread cheating scandal that rocked the Atlanta public school system in 2010 and 2011 illustrates how high-stakes performance pressure, without sufficient risk controls, can drive dangerous behavior. After becoming superintendent of the low-income and academically struggling Atlanta, Georgia school system in 1999, Beverly Hall implemented new measurement systems—many of them derived from business best practices—to motivate and evaluate the performance of teachers and principals. Educators whose students performed well on standardized tests received bonuses and public recognition; educators whose students fell short received reprimands, warnings, and eventually termination. With so much riding on "meeting the numbers," teachers and principals began taking drastic steps, including collaborating to change students' test answers while intimidating colleagues who threatened to expose the deception. As Atlanta students' (fabricated) test scores soared, leaders in business and politics praised Beverly Hall's data-driven approach for transforming a lagging school system into a model of success. More than a decade into Hall's tenure, multiple investigations finally exposed the scandal in Atlanta—and its terrible impact on the district's students. (For instructors who want to inject some extra energy, and fun, in the classroom, this case study provides material for students to stage skits in front of the class to illustrate how and why the cheating occurred.)

    Keywords: Atlanta; education; test; testing; standardized test; standardized testing; No Child Left Behind; NCLB; Cheating; Performance Pressure; measurement; incentives; Atlanta Public Schools; leadership; ethics; Management; Leadership; Ethics; Performance; Performance Evaluation; Performance Expectations; Risk Management; Education; Education Industry; United States; Georgia (state, US); Atlanta;

    Citation:

    Simons, Robert, and Natalie Kindred. "Atlanta Schools: Measures to Improve Performance." Harvard Business School Case 114-001, December 2013. (Revised February 2014.) View Details
  3. The Business of Business Schools: Restoring a Focus on Competing to Win

    As business leaders worry about the decline of American competitiveness, business schools are responding by changing their curriculums. But are the topics and approaches taught in today's business schools part of the solution or part of the problem? In this paper, I explore the possibility that four trends in current MBA curriculums—theory creep, mission creep, doing well by doing good, and the quest for enlightenment—are teaching students to be uncompetitive in today's global markets. If this hypothesis is true, I argue that business school curriculums should be re-centered around the tough choices needed to compete—and to win.

    Keywords: business schools; purpose of business schools; management education; business school curriculum; strategy execution; U.S. competitiveness; Capitalism; management profession; innovation; competing to win; Integrated Corporate Reporting; Trends; Customer Focus and Relationships; Decision Making; Design; Business Education; Curriculum and Courses; Innovation and Management;

    Citation:

    Simons, Robert. "The Business of Business Schools: Restoring a Focus on Competing to Win." Art. 2. Capitalism and Society 8, no. 1 (2013). View Details
  4. The Entrepreneurial Gap: How Managers Adjust Span of Accountability and Span of Control to Implement Business Strategy

    This study focuses on the relationship between business strategy, organization structure, and diagnostic control systems. The project analyzes data from 75 field studies to illustrate how managers adjust span of accountability and span of control to motivate different levels of innovation and entrepreneurial behavior. Six propositions are derived inductively about when, why, and how managers make these choices.

    Keywords: Organizational Structure; Entrepreneurship; Management Systems; Business Strategy; Innovation and Invention;

    Citation:

    Simons, Robert. "The Entrepreneurial Gap: How Managers Adjust Span of Accountability and Span of Control to Implement Business Strategy." Harvard Business School Working Paper, No. 13-100, June 2013. (Revised July 2013.) View Details
  5. Henkel: Building a Winning Culture

    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.

    Keywords: performance measurement; performance appraisals; human resource management; values; organizational transformations; pay for performance; strategy execution; Values and Beliefs; Work-Life Balance; Organizational Culture; Human Resources; Performance Evaluation; Compensation and Benefits;

    Citation:

    Simons, Robert, and Natalie Kindred. "Henkel: Building a Winning Culture." Harvard Business School Case 112-060, February 2012. View Details
  6. Agero: Enhancing Capabilities for Customers

    This case illustrates the importance of choosing a primary customer as the basis for organization design. Cross Country Group managers adjusted resource allocation, organization design and performance measures over time to transform Cross Country Group from an opportunistic family business into a sophisticated industry leader. Cross Country (renamed Agero in 2011) operated call centers that coordinated with thousands of small, independent towing companies—Cross Country's "service provider network"—to deliver roadside assistance services, such as vehicle towing and tire changes, to motorists covered by automakers' warranties and insurers' policies.

    The case describes Cross Country's evolution from 1972 to 2012 in three phases. This allows students to, at various stages, grapple with defining Cross Country's business (what business is it, and should it be, in?) and its primary customer (vehicle makers and insurers? motorists? service providers?). The answers to these questions have important implications for organization design.

    From 1972 to 1998, founder Sidney Wolk built the business through personal relationships with clients. A passionate entrepreneur, his approach to growth—secure customers first, figure out how to make money later—was remarkably successful, if sometimes chaotic. Facing an increasingly commoditized marketplace, in 1998 Wolk hired professional managers who implemented formal performance management systems and invested in sophisticated data analytics. From 1998 to 2007 (phase two), these investments allowed Cross Country to quantify service providers' impact on motorist satisfaction, monitor service providers' performance, and introduce programs to strengthen top-performing service providers' loyalty to Cross Country. Concurrently, the company undertook a two-step organization redesign to focus more resources on service providers (the new primary customer?), improve market-focused innovation and increase client satisfaction. In phase three, from 2008 to 2012, Cross Country entered the high-tech telematics/connected-vehicle business, invested in additional innovations to strengthen its service provider network, and rebranded itself as "Agero." Wolk and his team believed Cross Country had "more driver information than any other company." The case ends with key decisions for the future.

    Keywords: entrepreneurial management; entrepreneurial gap; entrepreneurship; auto industry; Insurance; performance management; performance measurement; performance measures; Performance Pressure; Decisions; Family Business; Resource Allocation; Organizational Design; Customer Focus and Relationships; Performance Evaluation; Growth and Development Strategy; Service Industry;

    Citation:

    Simons, Robert, and Natalie Kindred. "Agero: Enhancing Capabilities for Customers." Harvard Business School Case 113-001, February 2013. (Revised March 2013.) View Details

Books

  1. Seven Strategy Questions: A Simple Approach for Better Execution

    To stay ahead of the pack, you must translate your organization's competitive strategy into day-to-day actions that will enable your company to win in the marketplace. This means channeling resources into the right efforts, striking a balance between innovation and control, and getting everyone to pull in the same direction. How do you accomplish all this? Continually ask the right questions, advises Harvard Business School professor Robert Simons. By posing these provocative questions, you identify critical gaps in your strategy execution processes, focus on the most important choices you must make, and understand what's at stake in each one. In this concise guide, Simons presents the seven key questions you and your team must regularly explore together: (1) Who is your primary customer? Have you organized your company to deliver maximum value to that customer? (2) How do your core values prioritize shareholders, employees, and customers? Is everyone in your company committed to those values? (3) What critical performance variables are you tracking? How are you creating accountability for performance on those variables? (4) What strategic boundaries have you set? Does everyone know what actions are off-limits? (5) How are you generating creative tension? Is that tension catalyzing innovation across units? (6) How committed should your employees be to helping each other? Are they sharing responsibility for your company's success? (7) What strategic uncertainties keep you awake at night? How are you riveting everyone's attention on those uncertainties? These questions force you to reexamine the unspoken assumptions underlying your strategy and analyze how it's implemented through your business processes and structures. Drawing on decades of research into performance management systems and organization design, Seven Strategy Questions is a no-nonsense, must-read resource for all leaders in your organization.

    Keywords: Decision Choices and Conditions; Innovation and Management; Resource Allocation; Business Processes; Organizational Culture; Competitive Strategy;

    Citation:

    Simons, Robert L. Seven Strategy Questions: A Simple Approach for Better Execution. Harvard Business Review Press, 2010. View Details

Journal Articles

  1. Choosing the Right Customer

    Companies that win in competitive markets identify a primary customer and dedicate maximum resources to meeting that customer's needs. This article will show you how to identify the best primary customer for your business by analyzing perspective, capabilities, and profit potential; allocate resources through structural configurations; and build interactive control systems to learn and adapt over time.

    Keywords: strategy execution; customer focus; organization design; accountability; Management Control Systems; Customer Relationship Management; Organizational Design;

    Citation:

    Simons, Robert. "Choosing the Right Customer." Harvard Business Review 92, no. 3 (March 2014): 48–55. View Details
  2. The Business of Business Schools: Restoring a Focus on Competing to Win

    As business leaders worry about the decline of American competitiveness, business schools are responding by changing their curriculums. But are the topics and approaches taught in today's business schools part of the solution or part of the problem? In this paper, I explore the possibility that four trends in current MBA curriculums—theory creep, mission creep, doing well by doing good, and the quest for enlightenment—are teaching students to be uncompetitive in today's global markets. If this hypothesis is true, I argue that business school curriculums should be re-centered around the tough choices needed to compete—and to win.

    Keywords: business schools; purpose of business schools; management education; business school curriculum; strategy execution; U.S. competitiveness; Capitalism; management profession; innovation; competing to win; Integrated Corporate Reporting; Trends; Customer Focus and Relationships; Decision Making; Design; Business Education; Curriculum and Courses; Innovation and Management;

    Citation:

    Simons, Robert. "The Business of Business Schools: Restoring a Focus on Competing to Win." Art. 2. Capitalism and Society 8, no. 1 (2013). View Details
  3. Stress-Test Your Strategy: The 7 Questions to Ask

    An economic downturn can quickly expose the shortcomings of your business strategy. But can you identify its weak points in good times as well? And can you focus on those weak points that really matter? I identify seven questions all executives should ask in order to ensure their strategies' success. Have you identified your primary customer? Decided whether shareholders, employees, or customers come first? Narrowed down which performance variables to track? Have you set creative boundaries? Are you generating creative tension? Are you promoting cooperation among your employees? And at the end of the day (and in the middle of the night), are you thinking about the right issues as you ponder how the future will change your business? The answers to these questions can be tough, and their full implications are not always immediately clear. I provide a real-world guide to the various alternatives and their risks, illustrating my points with examples from companies including Home Depot, McDonald's, Merck, and Pfizer. There is no magic bullet that can target the pitfalls of your business strategy, but you must engage in ongoing, face-to-face dialogue with those around you concerning emerging data, unspoken assumptions, difficult choices, and, ultimately, action plans. You and they must be able to give clear, consistent answers to the seven questions if you want to be sure that your strategy is firmly on track.

    Keywords: Business Strategy; Creativity; Success; Customers; Employees; Business and Shareholder Relations; Performance; Risk and Uncertainty; Decision Choices and Conditions;

    Citation:

    Simons, Robert. "Stress-Test Your Strategy: The 7 Questions to Ask." Harvard Business Review 88, no. 11 (November 2010): 93–100. View Details
  4. Managing Risk in the New World

    Five experts gathered recently to discuss the future of enterprise risk management: Kaplan, the Baker Foundation Professor at Harvard Business School, who with his colleague David Norton developed the balanced scorecard; Mikes, an assistant professor at HBS who studies the evolution of risk management and the role of the chief risk officer; Simons, the Charles M. Williams Professor of Business Administration at HBS; Tufano, the Sylvan C . Coleman Professor of Financial Management at HBS; and Hofmann, the chief risk officer at Koch Industries. The panel was moderated by HBR senior editor David Champion. Among the questions they addressed were: How predictable was the financial meltdown of 2008-2009? Did new tools for assessing risk give a false sense of security? How do the challenges facing industrial companies differ from those facing the financial sector? Is outsourcing an effective risk-management tool? Have capital structures become a bit too efficient in many companies? What makes a good chief risk officer? Of all the management tasks that were bungled in the period leading up to the global recession of 2008--2009, none was bungled more egregiously than the management of risk. This HBR Spotlight attempts to untangle the reasons that major systemic failures occurred, and to pin down some lessons for leaders and managers in the future.

    Keywords: Forecasting and Prediction; Financial Crisis; Capital Structure; Job Cuts and Outsourcing; Risk Management;

    Citation:

    Kaplan, Robert S., Anette Mikes, Robert Simons, Peter Tufano, and Michael Hofmann Jr. "Managing Risk in the New World." Harvard Business Review 87, no. 10 (October 2009): 68–75. View Details

Book Chapters

Working Papers

  1. The Entrepreneurial Gap: How Managers Adjust Span of Accountability and Span of Control to Implement Business Strategy

    This study focuses on the relationship between business strategy, organization structure, and diagnostic control systems. The project analyzes data from 75 field studies to illustrate how managers adjust span of accountability and span of control to motivate different levels of innovation and entrepreneurial behavior. Six propositions are derived inductively about when, why, and how managers make these choices.

    Keywords: Organizational Structure; Entrepreneurship; Management Systems; Business Strategy; Innovation and Invention;

    Citation:

    Simons, Robert. "The Entrepreneurial Gap: How Managers Adjust Span of Accountability and Span of Control to Implement Business Strategy." Harvard Business School Working Paper, No. 13-100, June 2013. (Revised July 2013.) View Details
  2. Accountability and Control as Catalysts for Strategic Exploration and Exploitation: Field Study Results

    This paper reports the collective finding from 102 field studies that look at the relationship between two organization design variables: span of control and span of accountability. Clustering the data yields propositions suggesting that the relationship between these variables may be an important determinant of strategic exploitation and exploration activities. Data from the field studies suggest that, in accordance with the controllability principle, accountability and control are tightly aligned for exploitation activities. However, this result was found in only a small number of tasks and functions. In the majority of situations, spans of accountability were wider than spans of control. This "Entrepreneurial Gap" is posited to be a result of management's desire for innovation and exploration-and used as a catalyst for changing strategy, creating high levels of customer satisfaction, or motivating people to navigate complex matrix organizations.

    Keywords: Customer Satisfaction; Corporate Accountability; Governance Controls; Innovation and Management; Organizational Design; Strategy;

    Citation:

    Simons, Robert L. "Accountability and Control as Catalysts for Strategic Exploration and Exploitation: Field Study Results." Harvard Business School Working Paper, No. 10-051, January 2010. View Details

Cases and Teaching Materials

  1. Quiet Logistics (B)

    This two-part case focuses on how to identify and manage strategic uncertainties in an innovative, entrepreneurial start-up company. In the (A) case, students learn about Quiet Logistics, an e-commerce fulfillment company working with high-end apparel retailers such as Bonobos, Gilt Groupe, and Zara. What distinguishes the company from its rivals is its use of Kiva robots which collect customer items within the warehouse and bring them to the appropriate work station for employees to package and prepare for shipment. Processing up to 8,000 orders per day, the robots help make Quiet Logistics a highly-efficient firm and free its workers to complete additional value-added services such as handwritten thank-you notes. The company has also developed proprietary software to collect data on productivity measures, resulting in 99.99% accuracy in its inventory system and completing orders on-time.
    At the end of the (A) case, students are asked to list the strategic uncertainties that should be keeping the two co-founders awake at night as they consider growth opportunities for their company.
    The one-page (B) case reveals a surprising strategic twist that throws their plans into disarray. Students are asked to figure out how to respond.

    Keywords: strategy execution; strategic uncertainties; entrepreneurship; managing growth; disruptive change; robotics; Disruptive Technologies; e-commerce; managing start-ups; Management Control Systems; performance measurement; Business Growth and Maturation; Disruption; Entrepreneurship; Disruptive Innovation; Crisis Management; Risk Management; Organizational Change and Adaptation; Business Strategy; Competitive Strategy; Distribution Industry; Technology Industry; United States;

    Citation:

    Simons, Robert, and Natalie Kindred. "Quiet Logistics (B)." Harvard Business School Supplement 115-003, October 2014. View Details
  2. Quiet Logistics (A)

    This two-part case focuses on how to identify and manage strategic uncertainties in an innovative, entrepreneurial start-up company. In the (A) case, students learn about Quiet Logistics, an e-commerce fulfillment company working with high-end apparel retailers such as Bonobos, Gilt Groupe, and Zara. What distinguishes the company from its rivals is its use of Kiva robots which collect customer items within the warehouse and bring them to the appropriate work station for employees to package and prepare for shipment. Processing up to 8,000 orders per day, the robots help make Quiet Logistics a highly-efficient firm and free its workers to complete additional value-added services such as handwritten thank-you notes. The company has also developed proprietary software to collect data on productivity measures, resulting in 99.99% accuracy in its inventory system and completing orders on-time.
    At the end of the (A) case, students are asked to list the strategic uncertainties that should be keeping the two co-founders awake at night as they consider growth opportunities for their company.
    The one-page (B) case reveals a surprising strategic twist that throws their plans into disarray. Students are asked to figure out how to respond.

    Keywords: strategy execution; strategic uncertainty; entrepreneurship; disruptive change; managing growth; robotics; disruptive technology; e-commerce; managing start-ups; Management Control Systems; performance measurement; Business Growth and Maturation; Disruption; Entrepreneurship; Disruptive Innovation; Crisis Management; Risk Management; Organizational Change and Adaptation; Business Strategy; Competitive Strategy; Distribution Industry; Technology Industry; United States;

    Citation:

    Simons, Robert, and Natalie Kindred. "Quiet Logistics (A)." Harvard Business School Case 115-001, October 2014. View Details
  3. Atlanta Schools: Measures to Improve Performance

    The widespread cheating scandal that rocked the Atlanta public school system in 2010 and 2011 illustrates how high-stakes performance pressure, without sufficient risk controls, can drive dangerous behavior. After becoming superintendent of the low-income and academically struggling Atlanta, Georgia school system in 1999, Beverly Hall implemented new measurement systems—many of them derived from business best practices—to motivate and evaluate the performance of teachers and principals. Educators whose students performed well on standardized tests received bonuses and public recognition; educators whose students fell short received reprimands, warnings, and eventually termination. With so much riding on "meeting the numbers," teachers and principals began taking drastic steps, including collaborating to change students' test answers while intimidating colleagues who threatened to expose the deception. As Atlanta students' (fabricated) test scores soared, leaders in business and politics praised Beverly Hall's data-driven approach for transforming a lagging school system into a model of success. More than a decade into Hall's tenure, multiple investigations finally exposed the scandal in Atlanta—and its terrible impact on the district's students. (For instructors who want to inject some extra energy, and fun, in the classroom, this case study provides material for students to stage skits in front of the class to illustrate how and why the cheating occurred.)

    Keywords: Atlanta; education; test; testing; standardized test; standardized testing; No Child Left Behind; NCLB; Cheating; Performance Pressure; measurement; incentives; Atlanta Public Schools; leadership; ethics; Management; Leadership; Ethics; Performance; Performance Evaluation; Performance Expectations; Risk Management; Education; Education Industry; United States; Georgia (state, US); Atlanta;

    Citation:

    Simons, Robert, and Natalie Kindred. "Atlanta Schools: Measures to Improve Performance." Harvard Business School Case 114-001, December 2013. (Revised February 2014.) View Details
  4. Henkel's CEO Kasper Rorsted: On Building a Winning Culture

    Keywords: performance measurement; performance appraisals; human resource management; work/life balance; strategy execution; values; organizational transformations; pay for performance; Values and Beliefs; organizational culture; Performance Evaluation; Compensation and benefits; Organizational Change and Adaptation; Values and Beliefs; Work-Life Balance; Organizational Culture; Performance Evaluation; Compensation and Benefits;

    Citation:

    Simons, Robert L. "Henkel's CEO Kasper Rorsted: On Building a Winning Culture." Harvard Business School Video Supplement 114-703, October 2013. (Revised October 2013.) View Details
  5. Agero: Enhancing Capabilities for Customers

    This case illustrates the importance of choosing a primary customer as the basis for organization design. Cross Country Group managers adjusted resource allocation, organization design and performance measures over time to transform Cross Country Group from an opportunistic family business into a sophisticated industry leader. Cross Country (renamed Agero in 2011) operated call centers that coordinated with thousands of small, independent towing companies—Cross Country's "service provider network"—to deliver roadside assistance services, such as vehicle towing and tire changes, to motorists covered by automakers' warranties and insurers' policies.

    The case describes Cross Country's evolution from 1972 to 2012 in three phases. This allows students to, at various stages, grapple with defining Cross Country's business (what business is it, and should it be, in?) and its primary customer (vehicle makers and insurers? motorists? service providers?). The answers to these questions have important implications for organization design.

    From 1972 to 1998, founder Sidney Wolk built the business through personal relationships with clients. A passionate entrepreneur, his approach to growth—secure customers first, figure out how to make money later—was remarkably successful, if sometimes chaotic. Facing an increasingly commoditized marketplace, in 1998 Wolk hired professional managers who implemented formal performance management systems and invested in sophisticated data analytics. From 1998 to 2007 (phase two), these investments allowed Cross Country to quantify service providers' impact on motorist satisfaction, monitor service providers' performance, and introduce programs to strengthen top-performing service providers' loyalty to Cross Country. Concurrently, the company undertook a two-step organization redesign to focus more resources on service providers (the new primary customer?), improve market-focused innovation and increase client satisfaction. In phase three, from 2008 to 2012, Cross Country entered the high-tech telematics/connected-vehicle business, invested in additional innovations to strengthen its service provider network, and rebranded itself as "Agero." Wolk and his team believed Cross Country had "more driver information than any other company." The case ends with key decisions for the future.

    Keywords: entrepreneurial management; entrepreneurial gap; entrepreneurship; auto industry; Insurance; performance management; performance measurement; performance measures; Performance Pressure; Decisions; Family Business; Resource Allocation; Organizational Design; Customer Focus and Relationships; Performance Evaluation; Growth and Development Strategy; Service Industry;

    Citation:

    Simons, Robert, and Natalie Kindred. "Agero: Enhancing Capabilities for Customers." Harvard Business School Case 113-001, February 2013. (Revised March 2013.) View Details
  6. Luotang Power: Variances Explained

    The general manager of Luotang Power, a coal-fired power plant located in central China, reviews annual results before a meeting with the board of directors. He thought the company performed well during the year and both plant availability and fuel economy had improved over the previous year. However, the positive performance does not show in the financial results and he must investigate before presenting to the board. He considers performing a variance analysis to better understand plant performance compared to the previous year. He also examines the contractual arrangement the plant has with the provincial power company for a minimum purchase of electricity to supplement regional demand. The company had been successful at selling excess electricity to the power plant but over the past 12 months, demand has decreased. Students must complete a quantitative analysis of the plant's performance and prepare recommendations to improve reporting and evaluation of the plant's performance. This case can be used in an introductory managerial accounting course to explore variance analysis and incentives in contracts.

    Keywords: China; financial statements; contracts; management accounting; Variance Analysis; environmental regulations; incentives; Electric Power Generation; Contracts; Valuation; Energy Generation; Accounting; Performance Evaluation; Energy Industry; China;

    Citation:

    Simons, Robert, and Craig Chapman. "Luotang Power: Variances Explained." Harvard Business School Brief Case 913-533, January 2013. View Details
  7. Dovernet

    This case illustrates the implications of using stringent performance measurement systems to create performance pressure, motivate employee achievement, and sharpen a firm's competitiveness. It opens by describing the downsides of the ruthlessly competitive culture at Zynga, a young, successful online gaming company. A similar data-driven performance measurement system is employed at Dovernet, a Vancouver-based provider of enterprise communications and social-networking technologies. Dovernet's founder and CEO sees performance measurement systems as vital for cultivating the competitive, innovative workforce necessary for Dovernet to win in a fiercely competitive industry. Dovernet uses quarterly top-down reviews and stack ranking (with major implications for bonuses), as well as bottom-up reviews, to reward top achievers and put low performers on notice. The practical challenges of applying this system are illustrated in three brief vignettes. In the first two, students can assume the role of a manager charged with interpreting and acting on the negative reviews given to two employees with unique (but are they mitigating?) personal circumstances. The third vignette puts students in the role of an employee conducting a bottom-up review, as he struggles to balance honesty with the potential repercussions of giving his manager less-than-perfect feedback. The case allows students to consider the benefits and risks of different performance evaluation strategies and their implications for a firm's performance, culture, and employee morale. Are there certain types of firms or industries for which such systems are more appropriate? Do the integrity and effectiveness of a performance measurement system depend on managers' applying cold objectivity, or is there room for flexibility? In highly competitive industries, can firms lacking a strong performance emphasis beat competitors like Dovernet and Zynga?

    Keywords: Motivation and Incentives; Information Technology; Competitive Advantage; Decision Choices and Conditions; Organizational Culture; Performance Evaluation; Compensation and Benefits; Web Services Industry; Information Technology Industry; Vancouver;

    Citation:

    Simons, Robert, and Natalie Kindred. "Dovernet." Harvard Business School Case 112-061, April 2012. (Revised April 2012.) View Details
  8. Henkel: Building a Winning Culture

    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.

    Keywords: performance measurement; performance appraisals; human resource management; values; organizational transformations; pay for performance; strategy execution; Values and Beliefs; Work-Life Balance; Organizational Culture; Human Resources; Performance Evaluation; Compensation and Benefits;

    Citation:

    Simons, Robert, and Natalie Kindred. "Henkel: Building a Winning Culture." Harvard Business School Case 112-060, February 2012. View Details
  9. Raleigh & Rosse: Measures to Motivate Exceptional Service

    In January 2010, U.S. luxury goods retailer Raleigh & Rosse is being sued by its employees for encouraging "off the clock" hours. At the center of the class action lawsuit is the famous Raleigh & Rosse performance measurement system previously thought to be the core of the retailer's success. The system uses a sales-per-hour model to reward salespeople for time well spent on the floor. However, in this industry, where strong customer service is essential, many sales representatives feel they are encouraged to spend time off the clock tending to client needs; this issue and others have led to consequences that the company did not envision. The case illustrates how rapid company growth, decentralized management, and unrelenting pressure to perform can distort performance measurement systems and lead to undesirable consequences.

    Keywords: control systems; performance measurement; Goal setting; compensation; incentives; organizational culture; motivation; Sales compensation; Motivation and Incentives; Goals and Objectives; Growth Management; Lawsuits and Litigation; Organizational Culture; Management Systems; Customer Focus and Relationships; Employees; Performance Evaluation; Compensation and Benefits; Retail Industry; United States;

    Citation:

    Simons, Robert, and Michael Mahoney. "Raleigh & Rosse: Measures to Motivate Exceptional Service." Harvard Business School Brief Case 114-353, October 2011. View Details
  10. Raleigh & Rosse: Measures to Motivate Exceptional Service (Brief Case)

    Teaching Note for 4353.

    Keywords: control systems; performance measurement; Goal setting; compensation; incentives; organizational culture; motivation; Sales compensation; Motivation and Incentives; Goals and Objectives; Salesforce Management; Organizational Culture; Accounting; Performance Evaluation; Compensation and Benefits;

    Citation:

    Simons, Robert L., and Michael Mahoney. "Raleigh & Rosse: Measures to Motivate Exceptional Service (Brief Case)." Harvard Business School Teaching Note 114-355, October 2011. View Details
  11. Continental Media Group: Business Highlights

    Continental Media Group has a series of business reviews struggling to achieve profitability. This case focuses on the use of management control systems to identify emerging opportunities and the formulation of new strategies. The interactive system used by top managers--the Friday Packet--is described and illustrated in exhibits. Top managers use this system to focus organizational attention on the critical uncertainties of the business. Provides examples of how new strategies emerge from the dialogue that is generated by the interactive control system.

    Keywords: Accounting; Governance Controls; Management Systems; Risk Management; Business Strategy; Publishing Industry;

    Citation:

    Simons, Robert L., and Kathryn Rosenberg. "Continental Media Group: Business Highlights." Harvard Business School Case 110-087, June 2010. (Revised April 2011.) View Details
  12. Tennessee Controls: The Strategic Ranking Problem

    Tennessee Controls has instituted a new formal asset acquisition process to rank competing proposals. Judy Starnes, the new division manager, is asked to rank three proposals by using techniques to quantify economic returns, risk, as well as the credibility of the individuals submitting the proposals. The calculations, which take students approximately 30 minutes to perform, attempt to reduce each complex proposal to a single number. Discussion in class permits role-playing as well as an opportunity to evaluate the strengths and weaknesses of a very mechanistic approach to critical strategic issues.

    Keywords: Capital Budgeting; Governance Controls; Management Systems; Strategic Planning; Mathematical Methods; Electronics Industry;

    Citation:

    Simons, Robert L., and Dale Geiger. "Tennessee Controls: The Strategic Ranking Problem." Harvard Business School Case 191-083, February 1991. (Revised November 2010.) View Details
  13. Automation Consulting Services

    Illustrates the management control challenges that are associated with rapid growth and geographic expansion. Situated at an offsite Executive Committee Retreat. The three founding partners of a specialized consulting firm are grappling with several difficult questions and problems: 1) the tension between local office autonomy, entrepreneurship, and the need for a unified firm strategy; 2) the increasing need for standardized ways to monitor rising costs, capacity utilization, and new business development; 3) redefining the role of the Executive Committee and the role of formal systems as the partnership continues to grow.

    Keywords: Geographic Location; Governance Controls; Policy; Growth and Development Strategy; Management Teams; Expansion; Consulting Industry;

    Citation:

    Simons, Robert, and Hilary Weston. "Automation Consulting Services." Harvard Business School Case 190-053, November 1989. (Revised December 2012.) View Details
  14. Pfizer: Letter from the Chairman (B)

    This case continues the story begun in "Pfizer: A Letter from the Chairman" (HBS No. 110-003), revealing the letter Chairman and CEO Jeff Kindler wrote for the 2008 Annual Report.

    Keywords: Corporate Accountability; Corporate Governance; Business and Shareholder Relations; Value Creation; Decision Choices and Conditions; Annual Reports; Pharmaceutical Industry; United States;

    Citation:

    Simons, Robert L., and Kathryn Rosenberg. "Pfizer: Letter from the Chairman (B)." Harvard Business School Supplement 110-004, May 2010. (Revised June 2010.) View Details
  15. Sydney IVF: Stem Cell Research (TN)

    Teaching Note for 109017.

    Keywords: Strategy; Risk Management; Decisions; Cooperative Ownership; Product Development; Moral Sensibility; Governing Rules, Regulations, and Reforms; Expansion; Science-Based Business; Research; Management Practices and Processes; Business Subsidiaries; Biotechnology Industry; Sydney;

    Citation:

    Simons, Robert L., and Kathryn Rosenberg. "Sydney IVF: Stem Cell Research (TN)." Harvard Business School Teaching Note 110-092, June 2010. View Details
  16. Pfizer: Letter from the Chairman (A)

    This case explores maximizing shareholder value as a goal in executive decision making. Over a period of nine years, three different Pfizer CEOs make critical decisions intended to increase shareholder value. But the results are disappointing. To allow students to examine these decisions, the case provides excerpts from four Chairman's letters to shareholders from Pfizer's annual reports, followed by a description of the circumstances behind each letter. In the 2000 annual report, then-CEO Bill Steere discusses Pfizer's rise to industry prominence with the acquisition of Warner-Lambert. In the 2003 report, new CEO Hank McKinnell discusses Pfizer's performance goals and its acquisition of Pharmacia, which gave it control of the anti-arthritis drug Celebrex. In the 2005 report, McKinnell discusses his decision to keep Celebrex on the market despite health risks. In the 2006 report, new CEO Jeff Kindler barely mentions McKinnell's (controversial) early retirement and describes efforts to reform the company. The case closes in February 2009, just after Pfizer announces plans to acquire competitor Wyeth. Since 2000, Pfizer's tremendous growth in assets through acquisitions has not translated into significant growth in net income or share price. In closing, students are asked what Kindler should write in the letter to shareholders to open Pfizer's 2008 annual report.

    Keywords: Decision Choices and Conditions; Corporate Accountability; Corporate Governance; Annual Reports; Business and Shareholder Relations; Value Creation; Pharmaceutical Industry; United States;

    Citation:

    Simons, Robert L., and Natalie Kindred. "Pfizer: Letter from the Chairman (A)." Harvard Business School Case 110-003, July 2009. (Revised May 2010.) View Details
  17. Westchester Distributing, Inc. (A)

    Focuses on the three-way interaction among internal controls, employee behavior, and incentives. Salesmen are illegally providing kickbacks to customers of this beer-distribution firm. In turn, salesmen are reimbursing themselves by filing fraudulent expense reports. The owner/president of the business faces a difficult decision: if he fires the individuals involved, he risks a total business shut-down. Closes with the question of how to improve internal controls to avoid this type of occurrence in the future.

    Keywords: Financial Reporting; Crime and Corruption; Corporate Governance; Governance Controls; Salesforce Management; Behavior; Motivation and Incentives; Distribution Industry; Food and Beverage Industry;

    Citation:

    Simons, Robert L., and Robert Boxwell. "Westchester Distributing, Inc. (A)." Harvard Business School Case 191-118, January 1991. (Revised March 2010.) View Details
  18. Westchester Distributing, Inc. (B)

    Describes the actions taken by the owner/president to resolve the dilemma.

    Keywords: Crime and Corruption; Customers; Problems and Challenges; Governance Controls; Compensation and Benefits; Behavior; Distribution Industry;

    Citation:

    Simons, Robert L., and Robert Boxwell. "Westchester Distributing, Inc. (B)." Harvard Business School Supplement 191-119, January 1991. (Revised March 2010.) View Details
  19. Compagnie du Froid, S.A.

    The owner of an ice cream company must evaluate the performance of three regional businesses. To do the analysis, students must flex the budget by seasonal temperature; calculate revenue, volume, price, and efficiency variances; analyze the effects of transfer prices; and calculate return-on-investment. In addition, the owner considers how to set strategic boundaries and how to compensate his managers.

    Keywords: Analysis; Investment Return; Performance Evaluation; Revenue; Budgets and Budgeting; Food and Beverage Industry;

    Citation:

    Simons, Robert L., and Antonio Davila. "Compagnie du Froid, S.A." Harvard Business School Case 197-085, March 1997. (Revised February 2010.) View Details
  20. American Cancer Society: Access to Care

    CEO John Seffrin decides to radically change the strategy of the American Cancer Society. The new Access to Care strategy relies on advocacy to change public policy and increase the number of Americans eligible for cancer prevention and treatment. The new strategy brings with it considerable political risk. Leveraging an organization with three million volunteers, this case describes how he skillfully transforms the organization (structure, control systems, staff, shared values, etc.) to implement the new strategy.

    Keywords: Values and Beliefs; Governance Controls; Leading Change; Organizational Change and Adaptation; Organizational Structure; Nonprofit Organizations; Business Strategy; Health Industry; United States;

    Citation:

    Simons, Robert L., and Kathryn Rosenberg. "American Cancer Society: Access to Care." Harvard Business School Case 109-015, November 2008. (Revised October 2009.) View Details
  21. Merck: Managing Vioxx (A)

    This two-class case series allows students to stand in the shoes of CEO Ray Gilmartin during the unfolding stages of a reputational crisis. Merck's mission statement claims to "put patients first," but the company is widely criticized for putting profit before patient safety. The (A) case describes the discovery of Vioxx, a new arthritis drug, and asks students to calculate the drug's lifetime expected value. Supplements are handed out in class as the story unfolds: (B) evidence of life-threatening side effects, (C) decision options, (D) announcement to withdraw Vioxx, (E) reaction by patients, shareholders, media, and regulators, (F) Merck fights back, and (G) wrap-up. At the end of the case series, students may conclude that doing the right thing sometimes requires very hard choices.

    Keywords: Ethics; Crisis Management; Reputation; Decision Choices and Conditions; Customers; Business or Company Management; Cost vs Benefits; Corporate Accountability; Business and Shareholder Relations; Business and Stakeholder Relations; Customer Focus and Relationships; Pharmaceutical Industry;

    Citation:

    Simons, Robert L., Kathryn Rosenberg, and Natalie Kindred. "Merck: Managing Vioxx (A)." Harvard Business School Case 109-080, April 2009. View Details
  22. Bausch & Lomb, Inc.: Pressure to Perform (A)

    This case breaks the existing (and still available) Bausch & Lomb, Inc.: Pressure to Perform case into an (A) and a (B) case. The (A) case describes the revenue recognition concerns as of early-1994 and the organizational context within which the decisions were made.

    Keywords: Business Earnings; Revenue; Accounting; Management Practices and Processes; Situation or Environment; Earnings Management; Medical Devices and Supplies Industry; United States;

    Citation:

    Simons, Robert L. "Bausch & Lomb, Inc.: Pressure to Perform (A)." Harvard Business School Case 109-074, March 2009. View Details
  23. Bausch & Lomb, Inc.: Pressure to Perform (B)

    This case breaks the existing (and still available) Bausch & Lomb, Inc.: Pressure to Perform case into an (A) and a (B) case. The (B) case can be used in class to demonstrate the serious consequences of overly aggressive accounting. The (B) case should be used after students have discussed the (A) case.

    Keywords: Decision Choices and Conditions; Revenue Recognition; Organizations; Medical Devices and Supplies Industry; United States;

    Citation:

    Simons, Robert L. "Bausch & Lomb, Inc.: Pressure to Perform (B)." Harvard Business School Supplement 109-075, March 2009. View Details
  24. Sydney IVF: Stem Cell Research

    This case examines the strategy implementation and risk management decisions at Sydney IVF, a research-based in vitro fertilization and stem cell company based in Australia. Drs. Robert Jansen and Jock Anderson, who co-founded Sydney IVF in 1986, developed novel technologies which they leveraged to carve a leadership role in the inherently risky artificial fertilization business. As the company grew, its executives grappled with managing the political, ethical, and business risks associated with the contentious lab-based fertility field, instituting sophisticated safeguards such as an independent ethics committee and a "whistle blower" system for employees concerned with the company's practices. In less than two decades, Sydney IVF grew from just four employees to over 200, expanded internationally, and broadened its services to include prenatal screening for genetic diseases and DNA tests to determine lineage and paternity. In addition, the company launched a wholly-owned subsidiary, the Stem Cell Company. CEO Robert Jansen hoped to grow the Stem Cell Company but faced many challenges, including the significant ethical risks, challenging regulatory environment, and uncertain future of the stem cell field. The case describes how Jansen safeguards against risk without stifling the innovative spirit necessary to commercialize stem cells.

    Keywords: Ethics; Governing Rules, Regulations, and Reforms; Innovation and Management; Growth and Development Strategy; Risk Management; Genetics; Commercialization; Health Industry; Australia;

    Citation:

    Simons, Robert L., Kathryn Rosenberg, and Natalie Kindred. "Sydney IVF: Stem Cell Research." Harvard Business School Case 109-017, January 2009. (Revised February 2009.) View Details
  25. ATH MicroTechnologies: Making the Numbers

    An exercise that takes students through five stages of growth in an entrepreneurial start-up in the medical devices industry: 1) founding, 2) growth, 3) push to profitability, 4) relocation process, and 5) takeover by new management. At each stage, students must confront tensions in balancing profit, growth and control. Difficulties encountered in the business are due to management's attempts to design and use formal control systems to achieve profit and performance goals.

    Keywords: Business Growth and Maturation; Business Startups; Profit; Geographic Location; Governance Controls; Innovation and Invention; Management Succession; Medical Devices and Supplies Industry;

    Citation:

    Simons, Robert L. "ATH MicroTechnologies: Making the Numbers." Harvard Business School Case 108-091, May 2008. (Revised January 2009.) View Details
  26. ATH MicroTechnologies, Inc. (A): Making the Numbers

    An exercise that takes students through five stages of growth in an entrepreneurial start-up in the medical devices industry: 1) founding, 2) growth, 3) push to profitability, 4) refocusing process, and 5) takeover by new management. At each stage, students must confront tensions in balancing profit, growth and control. Difficulties encountered in the business are due to management's attempts to design and use formal control systems to achieve profit and performance goals.

    Keywords: Business Growth and Maturation; Business Startups; Profit; Geographic Location; Governance Controls; Innovation and Invention; Management Succession; Medical Devices and Supplies Industry;

    Citation:

    Simons, Robert L. "ATH MicroTechnologies, Inc. (A): Making the Numbers." Harvard Business School Case 108-092, May 2008. (Revised January 2009.) View Details
  27. Siebel Systems: Organizing for the Customer

    Siebel Systems is one of the fastest growing companies in America. Tom Siebel, the company's founder, has organized the business to accommodate growth and focus on the customer. Innovative information technology systems and clear accountability prove to be essential to this new approach to organization design. For example, a new employee must successfully pass an online test to demonstrate her understanding of Siebel's management systems and practices.

    Keywords: Organizational Structure; Software; Business Growth and Maturation; Information Technology; Performance Evaluation; Performance Expectations; Innovation and Management; Technological Innovation; Customer Focus and Relationships; Management Teams; Information Technology Industry; North and Central America;

    Citation:

    Simons, Robert, and Antonio Davila. "Siebel Systems: Organizing for the Customer." Harvard Business School Case 103-014, September 2002. (Revised January 2013.) View Details
  28. Becton Dickinson--Designing the New Strategic, Operational, and Financial Planning Process

    Describes management's attempts to design and install a sophisticated planning and control system in an international company as it changes its strategy. Issues of strategy implementation, accountability, and performance measurement are at the core of the analysis, as managers confront difficulty and resistance in using the system for "strategic, operational, and financial" control.

    Keywords: Organizational Change and Adaptation; Strategy; Business or Company Management; Corporate Accountability; Governance Controls; System; Performance Evaluation;

    Citation:

    Simons, Robert L., Antonio Davila, and Afroze A Mohammed. "Becton Dickinson--Designing the New Strategic, Operational, and Financial Planning Process." Harvard Business School Case 197-014, July 1996. (Revised December 2001.) View Details
  29. DIENA

    Requires students to draw a new organization structure diagram for a rapidly evolving business. A/S DIENA is a newspaper publisher founded during Latvia's 1990/91 struggle for independence from the USSR with a clear social mission to support democracy. With the help of Swedish investors, over the 1990s the entrepreneurial business survives the ups and downs of the transition economy to build a leading national newspaper. In 1997, seeking new sources of growth, A/S DIENA expands outside the Latvian capital to set up the Regional Press Group, a decentralized network of community newspapers emphasizing employee ownership and a separation of roles between editors and publishers. By 2001, however, the community newspaper market is shrinking, the Regional Press Group is not yet profitable, and a Western-style profit planning system is met with some resistance by former state employees. The decision point focuses on how to redesign the Regional Press Group and its interactions with the national newspaper and the other business units of A/S DIENA.

    Keywords: Employee Ownership; Organizational Design; Marketing Strategy; Managerial Roles; Growth and Development; Economic Systems; Publishing Industry; Journalism and News Industry; Latvia;

    Citation:

    Simons, Robert L., and Indra Reinbergs. "DIENA." Harvard Business School Case 102-001, September 2001. (Revised November 2001.) View Details
  30. Vyaderm Pharmaceuticals

    In 1999, the new CEO of Vyaderm Pharmaceuticals introduces an Economic Value Added (EVA) program to focus the company on long-term shareholder value. The EVA program consists of three elements: EVA centers (business units), EVA drivers (operational practices that improve EVA results), and an EVA-based incentive program for bonus-eligible managers. Over the next two years, the implementation of the program runs into several stumbling blocks, including resistance from regional managers, who push for "line of sight" EVA drivers; the difficulty of managing a large number of EVA centers; and unexpected bonus adjustments due to poor EVA performance. The decision point focuses on the competitive situation in a business unit where the sudden exit of a competitor produces an unexpected one-time windfall in earnings. Vyaderm's top managers struggle with the question of whether to adjust the EVA results to prevent demoralizing managers in future years when EVA results are likely to decline.

    Keywords: Compensation and Benefits; Employee Relationship Management; Economic Growth; Economic Systems; Management; Motivation and Incentives; Organizational Design; Organizational Structure; Performance Evaluation; Decision Choices and Conditions; Pharmaceutical Industry; Washington (state, US);

    Citation:

    Simons, Robert L., and Indra Reinbergs. "Vyaderm Pharmaceuticals." Harvard Business School Case 101-019, October 2000. (Revised January 2001.) View Details
  31. Cafes Monte Bianco: Building a Profit Plan TN

    Teaching Note for (9-198-088). A rewritten version of an earlier teaching note.

    Keywords: Business Strategy; Capital Structure; Business Earnings; Financial Statements; Business Plan; For-Profit Firms; Cost Management; Performance Evaluation; Planning; Financial Management; Investment Return; Cash Flow; Food and Beverage Industry; Manufacturing Industry; Italy;

    Citation:

    Simons, Robert L., and Indra Reinbergs. "Cafes Monte Bianco: Building a Profit Plan TN." Harvard Business School Teaching Note 101-044, November 2000. View Details
  32. Cafes Monte Bianco: Building a Profit Plan

    Using an income statement, balance sheet, and projected demand and cost schedules, students are required to build a profit plan for a closely-held coffee manufacturer in Italy. Students must estimate cash flow and ROE and use this analysis to evaluate the attractiveness of a new strategy.

    Keywords: Strategic Planning; Cash Flow; Investment Return; Profit; Financial Statements; Food and Beverage Industry; Italy;

    Citation:

    Simons, Robert L., and Antonio Davila. "Cafes Monte Bianco: Building a Profit Plan." Harvard Business School Case 198-088, January 1998. (Revised November 2000.) View Details
  33. Guidant Corporation: Shaping Culture Through Systems

    Guidant is a successful IPO start-up selling pacemakers and defibrillators. The case describes how managers install systems to balance innovation and control. Three parts of a shareholder value strategy are described. Controls include incentive systems, beliefs systems, and risk management systems.

    Keywords: Innovation Strategy; Corporate Strategy; Motivation and Incentives; Planning; Risk Management; Management Systems; Business Strategy; Value Creation; System; Service Industry; Financial Services Industry;

    Citation:

    Simons, Robert L., and Antonio Davila. "Guidant Corporation: Shaping Culture Through Systems." Harvard Business School Case 198-076, April 1998. (Revised May 2000.) View Details
  34. Cross Country Group, The: A Piece of the Rock (A)

    A new MBA graduate joins a privately held family business and sets ambitious growth goals for the next five years. To enhance motivation, he proposes a new incentive plan that will grant him a share of the wealth he creates. However, the family owners have a more conservative view regarding executive compensation.

    Keywords: Family Business; Decisions; Motivation and Incentives; Business Strategy; Performance Efficiency; Risk and Uncertainty; Growth and Development; Planning; Accounting Industry; Employment Industry;

    Citation:

    Simons, Robert L., and Indra Reinbergs. "Cross Country Group, The: A Piece of the Rock (A)." Harvard Business School Case 199-044, March 1999. (Revised March 2000.) View Details
  35. Polysar Limited

    Canada's largest chemical company produces and markets butyl rubber in two divisions, each treated as a profit center. The new plant in the North American Division operates below capacity resulting in a significant volume variance and an operating loss. The European Division is at capacity and is profitable. The actions of the European Division affect the capacity utilization of the North American Division. Includes divisional financial statements and interviews with the vice-presidents of each division.

    Keywords: Loss; Profit; Financial Management; Volume; Performance Capacity; Financial Statements; For-Profit Firms; Market Participation; Chemical Industry; Rubber Industry; Canada;

    Citation:

    Simons, Robert L. "Polysar Limited." Harvard Business School Case 187-098, February 1987. (Revised February 2000.) View Details
  36. Purity Steel Corporation, 2012

    Managers introduce a new performance evaluation system based on sales growth and return-on-investment (ROI). A branch manager wonders whether his new warehouse should be leased to mitigate the impact on ROI. Formulas and performance calculations are provided. A rewritten version of an earlier case.

    Keywords: Investment Return; Judgments; Motivation and Incentives; Performance Efficiency; Compensation and Benefits; Salesforce Management; Performance Consistency; Performance Productivity; Steel Industry;

    Citation:

    Simons, Robert L., and Antonio Davila. "Purity Steel Corporation, 2012." Harvard Business School Case 197-082, March 1997. (Revised November 2013.) View Details
  37. Codman & Shurtleff, Inc.: Planning and Control System

    Detailed description of the planning and control systems in use at Johnson & Johnson. Focuses on the actions of managers in one subsidiary in revising budget targets. Illustrates intensive strategic planning and financial planning process in a large, decentralized company. Includes interviews with the president and senior executives concerning benefits of the system. Raises issue of the role of formal control systems in decentralized organizations.

    Keywords: Strategic Planning; Planning; Forecasting and Prediction; Accounting Audits; Budgets and Budgeting; Business Strategy; Financial Management; Business or Company Management; Management Systems; Public Administration Industry; Financial Services Industry;

    Citation:

    Simons, Robert L. "Codman & Shurtleff, Inc.: Planning and Control System." Harvard Business School Case 187-081, May 1987. (Revised February 2000.) View Details
  38. Walker and Company: Profit Plan Decisions

    Ramsey Walker, a second-year MBA student, must decide how to control a family business as an absentee owner. After providing background details on the publishing industry, the case requires the reader to: 1) make a product segmentation decision; 2) prepare a profit plan; 3) calculate free cash flow effects; 4) determine key accounting performance measures; and 5) assess new control systems and their implementation.

    Keywords: Organizational Structure; Family and Family Relationships; Market Design; Management Systems; Planning; Profit; Performance Evaluation; Segmentation; Corporate Strategy; Investment Return; Publishing Industry;

    Citation:

    Simons, Robert L., and Ramsey Walker. "Walker and Company: Profit Plan Decisions." Harvard Business School Case 197-084, June 1997. (Revised February 2000.) View Details
  39. ABB: Accountability Times Two (B)

    Describes internal allocation conflicts in a complex global company structured as a matrix organization. ABB Switzerland has secured and will build an important power station project; however, internal market allocation policies dictate that this work be handled by ABB Sweden. Transfer pricing issues are described. The president of ABB Switzerland must decide whether or not to escalate the conflict up to superiors for resolution.

    Keywords: Multinational Firms and Management; Conflict Management; Complexity; Sweden; Switzerland;

    Citation:

    Simons, Robert L. "ABB: Accountability Times Two (B)." Harvard Business School Supplement 192-142, May 1992. (Revised January 2000.) View Details
  40. Asea Brown Boveri

    In 1987, two European rivals--Asea AB of Sweden and BBC Brown Boveri Ltd. of Switzerland--merged to form Asea Brown Boveri. The new company employed 150,000 employees in 850 legal entities operating in 140 countries. The case describes the challenges facing Percy Barnevik--the organization's leader--and how he resolved those challenges through staffing, communicating priorities, new structural alignments, and information and reporting systems.

    Keywords: Mergers and Acquisitions; Globalization; Problems and Challenges; Leadership Style; Selection and Staffing; Organizational Structure; Reports;

    Citation:

    Simons, Robert L., and Christopher A. Bartlett. "Asea Brown Boveri." Harvard Business School Case 192-139, May 1992. (Revised January 2000.) View Details
  41. Asea Brown Boveri: The ABACUS System

    Describes the computer-based information system (ABACUS) used to monitor and control business operations in a complex, global company. Describes the technical attributes of the database system, financial reporting requirements, target setting and profit calculations on a full-cost basis (including interest on capital employed and replacement cost depreciation). Exhibits illustrate both inputs and graphical outputs from the system as well as the details of accounting calculations.

    Keywords: Financial Reporting; Profit; Business Growth and Maturation; Data and Data Sets; Design; Accounting Audits; Growth and Development; Globalized Firms and Management; Complexity; Technology Industry;

    Citation:

    Simons, Robert L. "Asea Brown Boveri: The ABACUS System." Harvard Business School Case 192-140, May 1992. (Revised January 2000.) View Details
  42. ABB: Accountability Times Two (A)

    Describes the complexity of setting and reconciling performance targets in a global, matrix company. The president of the Finnish industry and rail transport company has received targets from two bosses--his regional superior and his business area superior. Each has set different performance targets (financial and non-financial) which must be reconciled. In addition, a bonus scheme must be developed and approved.

    Keywords: Performance Expectations; Complexity; Multinational Firms and Management; Finland;

    Citation:

    Simons, Robert L. "ABB: Accountability Times Two (A)." Harvard Business School Supplement 192-141, May 1992. (Revised January 2000.) View Details
  43. J Boats, Inc.

    During the 20-year evolution of a family-owned, entrepreneurial sailboat company, two founders leverage their design and marketing skills to build one of the most recognized brands in the recreational boating industry. The founder then considers management succession and the need to improve financial planning and control systems to capitalize on brand value.

    Keywords: Corporate Entrepreneurship; Family Business; Risk Management; Financial Management; Leveraged Buyouts; Brands and Branding; Competitive Strategy; Capital Markets; Valuation; Shipping Industry; Transportation Industry;

    Citation:

    Simons, Robert L. "J Boats, Inc." Harvard Business School Case 197-015, August 1996. (Revised December 1999.) View Details
  44. MCI Communications: Planning for the 1990s

    Concentrates on the evolution of MCI's strategy-setting process following a period of dramatic growth. Opportunistic strategies during MCI's early years have given top managers a dislike of formal strategic planning and a strongly-held belief in top down strategy setting. Questions whether the nature of planning will have to change as the company passes $6 billion in sales and is faced with increasing global competition.

    Keywords: Globalization; Growth and Development; Planning; Strategic Planning; Growth Management; Business or Company Management; Competition; Alignment; Communications Industry;

    Citation:

    Simons, Robert L., and Hilary Weston. "MCI Communications: Planning for the 1990s." Harvard Business School Case 190-136, March 1990. (Revised November 1999.) View Details
  45. Automatic Data Processing: The EFS Decision

    Illustrates how ADP's top management uses formal planning and control systems to establish strategic boundaries for its business units. Top management has developed a detailed list of strategic criteria that ADP managers use to evaluate products and business units, as well as acquisition and divestiture candidates. Focuses on whether ADP should divest a profitable business that is drifting outside defined strategic boundaries.

    Keywords: Information Industry;

    Citation:

    Simons, Robert L., and Hilary Weston. "Automatic Data Processing: The EFS Decision." Harvard Business School Case 190-059, November 1989. (Revised November 1999.) View Details
  46. Note on Identifying Strategic Risk,A

    Outlines: 1) the sources of business risk, 2) how to assess internal risk pressures, and 3) the antecedents of misrepresentation of fraud.

    Keywords: Strategy; Risk and Uncertainty;

    Citation:

    Simons, Robert L. "Note on Identifying Strategic Risk,A." Harvard Business School Background Note 199-031, December 1998. (Revised November 1999.) View Details
  47. Hamilton Financial Investments: A Franchise Built on Trust

    Provides a vehicle for students to evaluate risk management in the fast-paced mutual funds industry. A new risk manager has been hired to install new management controls and procedures. A series of decisions will determine how much business and franchise risk the business will assume.

    Keywords: Risk Management; Management Teams; Managerial Roles; Forecasting and Prediction; Investment Funds; Performance Evaluation; Corporate Strategy; Change Management; Financial Services Industry; Banking Industry;

    Citation:

    Simons, Robert L., and Antonio Davila. "Hamilton Financial Investments: A Franchise Built on Trust." Harvard Business School Case 198-089, April 1998. (Revised November 1999.) View Details
  48. Turner Construction Company: Project Management Control Systems

    After providing a brief overview of Turner Construction Co.'s structure and project work, the case gives a detailed description of its project management control system, the IOR system. In addition to explaining the mechanics of the IOR system, the case identifies the uses and benefits of the system from the perspectives of different level managers. Finally, the role of the IOR system as a decision support tool is illustrated through a specific dilemma on a project in progress.

    Keywords: Mission and Purpose; Cost Management; Performance Evaluation; Risk Management; Strategic Planning; Planning; Management Systems; Management Teams; Construction Industry;

    Citation:

    Simons, Robert L., and Hilary Weston. "Turner Construction Company: Project Management Control Systems." Harvard Business School Case 190-128, March 1990. (Revised October 1999.) View Details
  49. Mary Kay Cosmetics: Sales Force Incentives (A)

    Describes the incentive system by which Mary Kay Cosmetics motivates the sales force of 200,000 independent agents who comprise the firm's only distribution channel. Illustrates the powerful effect on sales-force behavior that results when creative types of employee recognition are combined with financial incentives. Focuses on the challenges that managers face when they try to reduce program costs by modifying the VIP automobile program that awards the use of pink Cadillacs and other cars to successful sales agents. A detailed description of the parameters and formulas that drive the recognition and reward programs is provided.

    Keywords: Motivation and Incentives; Cost Management; Salesforce Management; Distribution Channels; Beauty and Cosmetics Industry; United States;

    Citation:

    Simons, Robert L., and Hilary Weston. "Mary Kay Cosmetics: Sales Force Incentives (A)." Harvard Business School Case 190-103, March 1990. (Revised October 1999.) View Details
  50. Nordstrom: Dissension in the Ranks? (A)

    In 1989, the performance measurement systems and compensation policies of Nordstrom Department Stores unexpectedly came under attack by employees, unions, and government regulators. The case describes the "sales-per-hour" monitoring and compensation system that many believed to be instrumental in Nordstrom's phenomenal success. Illustrates how rapid company growth, decentralized management, and unrelenting pressure to perform can distort performance measurement systems and lead to undesirable consequences.

    Keywords: Performance Consistency; Performance Evaluation; Compensation and Benefits; Motivation and Incentives; Labor Unions; Salesforce Management; Retention; Growth and Development; Industrial Products Industry; Utilities Industry;

    Citation:

    Simons, Robert L., and Hilary Weston. "Nordstrom: Dissension in the Ranks? (A)." Harvard Business School Case 191-002, July 1990. (Revised October 1999.) View Details
  51. Kidder, Peabody & Co.: Creating Elusive Profits

    On April 17, 1994, Kidder, Peabody & Co. announced a $350 million charge against earnings resulting from the discovery of false trading profits. That same day, the termination of Joseph Jett's employment with the company was made public. By illustrating the mechanics of bond accounting, this case describes the trading strategy that led to the creation of false profits. Failures of internal control are also discussed. The case ends by asking who was to blame.

    Keywords: Bonds; Governance Controls; Crime and Corruption; Financial Reporting; Profit; Financial Strategy;

    Citation:

    Simons, Robert L., and Antonio Davila. "Kidder, Peabody & Co.: Creating Elusive Profits." Harvard Business School Case 197-038, December 1996. (Revised October 1999.) View Details
  52. Citibank: Performance Evaluation

    Citibank has introduced a new, comprehensive performance-scorecard system. A regional president struggles with a tough decision: how to evaluate an outstanding branch manager who has scored poorly on an important customer satisfaction measure. This case provides a scoring sheet to be completed by the reader and an explanation of the ramifications of the decision for the business's strategy.

    Keywords: Performance Evaluation; Balanced Scorecard; Business Strategy; Customer Satisfaction; Performance Expectations; Decisions; Motivation and Incentives; Quality; Banking Industry;

    Citation:

    Simons, Robert L., and Antonio Davila. "Citibank: Performance Evaluation." Harvard Business School Case 198-048, December 1997. (Revised October 1999.) View Details
  53. Bausch & Lomb, Inc.: Pressure to Perform

    Bausch & Lomb is the subject of press attacks and experiences a sharp fall in stock price when management practices are exposed. Aggressive goal setting, supported by financial market expectations, is discussed as a precursor to a series of events that results in misstated financial results and angry customers. A defiant CEO stands his ground as shareholders demand his resignation. Industry and competitive data allow students to calibrate performance pressures.

    Keywords: Performance Expectations; Management Practices and Processes; Ethics; Financial Markets; Financial Statements; Business and Shareholder Relations;

    Citation:

    Simons, Robert L., Alex C. Sapir '97, and Indra Reinbergs. "Bausch & Lomb, Inc.: Pressure to Perform." Harvard Business School Case 198-009, April 1998. (Revised June 1999.) View Details
  54. Becton Dickinson: Designing the New Strategic, Operational, and Financial Planning Process TN

    Teaching Note for (9-197-014).

    Keywords: Business Strategy; Planning; Finance;

    Citation:

    Simons, Robert L., and Antonio Davila. "Becton Dickinson: Designing the New Strategic, Operational, and Financial Planning Process TN." Harvard Business School Teaching Note 198-034, November 1997. (Revised June 1999.) View Details
  55. Asea Brown Boveri (Condensed)

    The merger of Asea AB and BBC Brown Boveri required a restructuring of operations and a change in organizational cultures. Competitive success also necessitated the benefits of scale while remaining "local" for political and customer-responsiveness reasons. The case describes these competitive pressures, which resulted in the decision to adopt a matrix organization. To be used with Asea Brown Boveri: The ABACUS System.

    Keywords: Change Management; Mergers and Acquisitions; Restructuring; Cost vs Benefits; Competitive Strategy; Organizational Change and Adaptation; Growth and Development; Performance Effectiveness; Consumer Products Industry;

    Citation:

    Simons, Robert L. "Asea Brown Boveri (Condensed)." Harvard Business School Case 199-027, November 1998. (Revised December 1998.) View Details
  56. Nordstrom: Dissension in the Ranks? (B)

    Presents a follow-up to the (A) case.

    Keywords: Rank and Position; Conflict and Resolution; Consumer Products Industry; Apparel and Accessories Industry;

    Citation:

    Simons, Robert L., and Hilary Weston. "Nordstrom: Dissension in the Ranks? (B)." Harvard Business School Supplement 192-027, July 1990. (Revised April 1998.) View Details
  57. Making the Grade (A)

    Focuses on the dilemma of a young professor at a graduate school of business. He must decide what final grade to give a student who has worked extremely hard, but he is constrained by the school's "forced curve" grading policy. Designed to explore the multiple purposes of performance measurement (motivation, evaluation, early warning) and the assumptions that underlie performance management systems.

    Keywords: Design; Management Systems; Performance Evaluation; Motivation and Incentives; Education Industry;

    Citation:

    Simons, Robert L. "Making the Grade (A)." Harvard Business School Case 198-083, December 1997. View Details
  58. Automatic Data Processing: The EFS Decision (Abridged)

    The managing director of one of ADP's divisions must recommend whether to divest, harvest, or grow the division. Recent performance has been excellent and the near-term outlook for profitability is very promising. Despite some strategic concerns, the strong financial performance and near-term prospects seem to suggest continued support of the division.

    Keywords: Business Divisions; Success; Performance Expectations; Strategic Planning; Strategy;

    Citation:

    Simons, Robert L. "Automatic Data Processing: The EFS Decision (Abridged)." Harvard Business School Case 197-018, September 1996. View Details
  59. Preparing and Using the Statement of Cash Flows

    Explains the concepts and procedures behind the statement of cash flows. Presents an overview of the reporting objectives of this report, and describes in detail the preparation of the cash flow statement using both the indirect method and the direct method. A complete numerical example is presented. Financial analysis techniques using the cash flow statement are also described. A rewritten version of an earlier note.

    Keywords: Financial Statements; Cash Flow;

    Citation:

    Simons, Robert L., and Antonio Davila. "Preparing and Using the Statement of Cash Flows." Harvard Business School Background Note 196-108, September 1995. (Revised June 1996.) View Details
  60. Chemalite, Inc. (B): Cash Flow Analysis

    Students are asked to use actual and pro forma financial statements to prepare a statement of cash flows under both the direct and indirect method.

    Keywords: Analysis; Cash Flow; Financial Statements;

    Citation:

    Simons, Robert L., and Antonio Davila. "Chemalite, Inc. (B): Cash Flow Analysis." Harvard Business School Case 195-130, September 1994. (Revised August 1995.) View Details
  61. AB SKA (Sweden)

    A senior manager faces three accounting and control decisions related to a new R&D project: to expense or capitalize, how to implement management control over the R&D function, and how to use activity-based cost drivers for product costing.

    Keywords: Cost Accounting; Management Practices and Processes; Cost Management; Activity Based Costing and Management; Research and Development; Sweden;

    Citation:

    Hawkins, David F., V.G. Narayanan, and Robert L. Simons. "AB SKA (Sweden)." Harvard Business School Case 195-180, December 1994. View Details
  62. General Electric: Compliance Systems

    After General Electric (GE) is indicted in 1985 for defrauding the Department of Defense, Chairman John F. Welch takes dramatic steps to prevent a recurrence. This case documents the new systems and procedures that are put in place to ensure that all GE employees are aware of the boundaries of acceptable behavior. Closes with a discussion of the benefits and costs of Welch's approach. A follow-up to General Electric: Valley Forge (A--H). Facts and Figures on Defense Procurement is intended to be used as supplementary reading in teaching this case.

    Keywords: Policy; Contracts; Business or Company Management; Communication; Business History; Behavior; Boundaries; Management Style; Cost Management; Electronics Industry;

    Citation:

    Simons, Robert L. "General Electric: Compliance Systems." Harvard Business School Case 189-081, January 1989. (Revised June 1993.) View Details
  63. USA Today

    USA Today is a national newspaper struggling to achieve profitability. This case focuses on the use of management control systems to identify emerging opportunities and the formulation of new strategies. The interactive system used by top managers--the Friday Packet--is described and illustrated in exhibits. Top managers use this system to focus organizational attention on the critical uncertainties of the business. Provides examples of how new strategies emerge from the dialogue that is generated by the interactive control system.

    Keywords: Strategy; Competitive Advantage; Management Analysis, Tools, and Techniques; Managerial Roles; Forecasting and Prediction; Growth and Development Strategy; Risk Management; Labor and Management Relations; Organizational Change and Adaptation; Risk and Uncertainty; Journalism and News Industry; United States;

    Citation:

    Simons, Robert L. "USA Today." Harvard Business School Case 191-004, January 1991. (Revised March 1992.) View Details
  64. Facts and Figures on Defense Procurement: The Department of Defense and Defense Procurement, An Overview

    Provides statistics and other factual information on the Department of Defense procurement process, DOD expenditures, market share segmentation, the variety of contract types, and the role of the Defense Contract Audit Agency.

    Keywords: National Security;

    Citation:

    Simons, Robert L. "Facts and Figures on Defense Procurement: The Department of Defense and Defense Procurement, An Overview." Harvard Business School Background Note 190-060, November 1989. (Revised June 1991.) View Details
  65. IBM Corp.: ""Make It Your Business"" (A)

    In 1987, IBM changed its strategy in an attempt to become a market-driven company rather than a product-driven company. The case begins with a description of the new strategy and the reasons for the change and then describes the top-down sales planning and quota system in use under the old strategy. Concludes with a discussion of the reasons why the new strategy cannot be implemented without changing the sales planning and quota systems. The challenge for students is to design new systems to support IBM's market-driven strategy.

    Keywords: Commercialization; Competitive Advantage; Business Strategy; Goals and Objectives; Strategic Planning; Motivation and Incentives; Sales; Volatility; System; Information Technology Industry;

    Citation:

    Simons, Robert L. IBM Corp.: ""Make It Your Business"" (A). Harvard Business School Case 190-137, March 1990. (Revised June 1991.) View Details
  66. General Electric: Valley Forge (A)

    A series of eight vignette cases designed to be taught in one classroom session. This case describes a potential problem in the way that General Electric has billed the government under a large defense contract. Designed to allow students to discuss what actions top managers and the Department of Defense should take at each step in the proceedings. Sets the stage for the follow-up case, General Electric: Compliance Systems. Facts and Figures on Defense Procurement is intended to be used as supplementary reading in teaching this case.

    Keywords: Government Administration; Contracts; Policy; Accounting; Management Teams; Business and Government Relations; Industrial Products Industry;

    Citation:

    Simons, Robert L. "General Electric: Valley Forge (A)." Harvard Business School Case 189-009, January 1989. (Revised April 1991.) View Details
  67. American Red Cross Blood Services: Northeast Region

    Recounts the financial difficulties and management changes experienced by American Red Cross Blood Services: Northeast Region (NER) during the 1980s. After summarizing industry-wide changes in the collection, testing, and distribution of blood and blood products, the case describes the way in which NER management responded to those changes. The types of changes highlighted include: the transition from non-financial to financial planning and monitoring systems; organizational restructuring; increased dissemination of financial information among line management; and conversion to a cost accounting system based on cost center accountability. The primary teaching objective is to illustrate both the need for and the challenges of changing management control systems in response to changes in an organization's marketplace and strategy. The case reveals various factors that must be considered to implement major control changes including management training, differing management styles, information systems capabilities, corporate culture, and a continually changing market.

    Keywords: Change Management; Budgets and Budgeting; Financial Management; Restructuring; Health; SWOT Analysis; Social Enterprise; Marketplace Matching; Management Style; Organizational Culture; Organizational Change and Adaptation; Medical Devices and Supplies Industry; Health Industry; North and Central America;

    Citation:

    Simons, Robert L. "American Red Cross Blood Services: Northeast Region." Harvard Business School Case 190-078, January 1990. (Revised March 1991.) View Details

Presentations

Other Publications and Materials

  1. Henkel's Culture Shift

    This case descriibes 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.

    Keywords: strategy execution; culture; new CEO; Change; performance measures; accountability; Organizational Change and Adaptation; Corporate Accountability; Leading Change; Competitive Strategy; Organizational Culture; Performance Evaluation; Consumer Products Industry; Germany;

    Citation:

    Simons, Robert. "Henkel's Culture Shift." The Case Study. Financial Times (October 8, 2012). View Details