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FitzGerald Associates www.ManagementConsultants.com Tom Horne & Tom FitzGerald

FitzGerald Associates www.ManagementConsultants.com Tom Horne & Tom FitzGerald. Coaching To The Bottom Line Mobilizing In the Face of Recession Oct. 13, 2008. FitzGerald Associates www.ManagementConsultants.com Since 1976. Introductions. FitzGerald Associates www.ManagementConsultants.com.

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FitzGerald Associates www.ManagementConsultants.com Tom Horne & Tom FitzGerald

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  1. FitzGerald Associateswww.ManagementConsultants.comTom Horne & Tom FitzGerald Coaching To The Bottom Line Mobilizing In the Face of Recession Oct. 13, 2008

  2. FitzGerald Associateswww.ManagementConsultants.comSince 1976 Introductions

  3. FitzGerald Associateswww.ManagementConsultants.com Investors, Managers, Coaches, Consultants Objectives • How to increase profits NOW • How to increase competitiveness NOW - and for the long term

  4. FitzGerald Associateswww.ManagementConsultants.com Our Objectives • Have Fun • Answer Lots of Questions

  5. Study Longitudinal studies by The London School of Economics (LSE) and McKinsey & Co.

  6. Results A 20% Improvement In 3 Critical Functions Generates a 42% Increase in Financial Returns (High performers as well as low) (Reverse also true )

  7. Results Equivalent to • Increase of 5% in ROCE • 25% increase in workforce • Going from 10 plants to 17 • Increasing capital investment by 70%

  8. FitzGerald Associateswww.ManagementConsultants.com The Concepts • Will to Compete • The Operating Dynamic • ManageMENT Vs Managers • Intrinsic Trajectory • The company as living entity

  9. Origins of Performance Business Processes Management Systems Corporate Will

  10. Corporate Will Corporate Culture Corporate Psychology Corporate Energy Business Motivation Corporate Drive Will to Combat

  11. Corporate Will Will to Compete (AKA The Operating Dynamic) Root Cause Of All Business Performance If strong, company succeeds If weak, the company falters

  12. Corporate Will That complex of organizational and human factors that underlie, cause and impel all corporate performance (~100) (Entirely within the control of management)

  13. Origins of Performance Cost of Change Business Processes Management Systems CorporateWill

  14. FitzGerald Associateswww.ManagementConsultants.com The ROI In changing Corporate Will Can be extraordinary (The McKinsey/LSE Studies)

  15. FitzGerald Associateswww.ManagementConsultants.com Why Transform Corporate Will • Ambition (the 40%) • Recession (the 40%) • On-boarding New sr. execs have an 18 month, 50% retention rate $1M per failure • M&A (pre- or post-acquisition) 70% failure rate • Only 30% of reengineering programs workplacebo effect and luck • Mobilizing the company • Other

  16. FitzGerald Associateswww.ManagementConsultants.com Where the Results Come From • Systemic Efficiencies • New Tactics • New Strategies • Reengineering

  17. FitzGerald Associateswww.ManagementConsultants.com Corporate Will 6 Critical Functions 9 Generators

  18. FitzGerald Associateswww.ManagementConsultants.com A small change In three Critical Functions Generates a large change in Financial Returns

  19. FitzGerald Associateswww.ManagementConsultants.com These Drivers Are entirely within The control of Management!

  20. FitzGerald Associateswww.ManagementConsultants.com Critical Functions are changed by changing the Generators

  21. The 6 Critical Functions 1 PERFORMANCE MANAGEMENT 2 TALENT MANAGEMENT 3 LEAN OPERATIONS 4 Profitable Growth Orientation 5 Customer Orientation 6 Innovation / Creativity

  22. The 9 Generators • CORPORATE DECISIVENESS • ACKNOWLEDGEMENT OF WORK • ACCOUNTABILITY • CORPORATE ASSERTIVENESS, ENERGY • COMMITMENT OF MANAGE-MENT • OPENESS OF MANAGE-MENT • ADAPTABILITY • EFFECTIVENESS • COOPERATION

  23. FitzGerald Associateswww.ManagementConsultants.com The Transformation Process • Measure the 15 drivers (Functions and Generators) of performance and their subsidiary functions – a profile of the causes of performance • Determine the desired profile – item by item • Cause the individual managers to commit to specific action steps, with dates, to fix or improve key drivers and subs • Cause the individuals to execute the action steps

  24. FitzGerald Associateswww.ManagementConsultants.com Measurement + How we do it

  25. FitzGerald Associateswww.ManagementConsultants.comSince 1976 Coding Convention All line items can have a + or – value A, B, C, D are positive descending E, F, G are negative

  26. Consolidated Statements of Operating Dynamic Gamma, Inc. Balance Sheet 06/2008 Score %Level % of Max (Min) A - G PERFORMANCE MANAGEMENT Vision of Future 21.429 D Goal Definition 42.857 C Action Plans 7.143 D Plans Communicated (14.286) E Understanding Personal Contribution 64.286 B Decisions Implemented 7.143 D Decisions Followed Up 7.143 D Planning/Envisioning Capability 85.714 A Appropriate KPI's Measured 0.000 D Performance Management Balance 19.841 D TALENT MANAGEMENT Attracting / Hiring 7.143 D Leadership Development 35.714 C Retention 71.429 B Out-Placement 28.571 C Leadership Skills 28.571 C Individual Development Plans 0.000 D Talent Management Balance 35.714 C LEAN OPERATIONS Competitive Information 50.000 C Efficiency Improvement Efforts 42.857 C Implementation of Improvements 50.000 C Lean Operations Balance 47.024 C PROFITABILITY/GROWTH Growth (14.286) E Profitable Growth Focus 28.571 C Profitability / Growth Balance 20.000 D CUSTOMER ORIENTATION Customer Communication 21.429 D Enhancement of Customer Service 57.143 B Customer Experience 42.857 C Knowledge of Customer Wants 42.857 C Customer Orientation Balance 47.321 C INNOVATION Innovation Encouraged 35.714 C Purposeful Innovation 21.429 D Innovation Balance 28.571 C Total Assets (Liabilities) 29.993 C

  27. Consolidated Statements of Operating Dynamic Gamma, Inc. Balance Sheet 06/2008Score %Level PERFORMANCE MANAGEMENT % of Max (Min) A – G Vision of Future 21.429 D Goal Definition 42.857 C Action Plans 7.143 D Plans Communicated (14.286) E Understanding Personal Contribution 64.286 B Decisions Implemented 7.143 D Decisions Followed Up 7.143 D Planning/Envisioning Capability 85.714 A Appropriate KPI's Measured 0.000 D Performance Management Balance 19.841 D

  28. Consolidated Statements of Operating DynamicGamma, Inc. Profit (Loss) ScoreLevel % of Max (Min) A – G CORPORATE DECISIVENESS Need for Consensus 21.429 D  Move to Decision 0.000 D  Move to Action 28.571 C  Manager Confidence 71.429 B Net Corporate Decisiveness 27.679 C ACKNOWLEDGEMENT OF WORK   Communication Re Work 21.429 D  Quality of Evaluations 64.286 B  Appreciation 50.000 C Net Acknowledgement of Work 44.048 C ACCOUNTABILITY Peer Accountability 35.714 C  Frequency of Reporting 64.286 B  Deadline Enforcement 21.429 D Net Accountability 38.571 C CORPORATE ASSERTIVENESS, ENERGY Manager Assertiveness 7.143 D  Manager Enthusiasm 7.143 D  Manager Competitiveness 57.143 B Net Corporate Assertiveness, Energy 27.976 C COMMITMENT OF MANAGEMENT Manager Commitment 64.286 B  Peer Commitment 28.571 C Net Commitment of Management 46.429 C OPENESS OF MANAGEMENT Worker Trust 42.857 C  Worker Empowerment 57.143 B Net Openness of Management 50.000 C ADAPTABILITY Speed of Adaptation 0.000 D  Willingness to Change 35.714 C Net Adaptability 17.857 D EFFECTIVENESS Success Momentum 0.000 D  Schedule Consistency 14.286 D  Focus on Issues (28.571) F Net Effectiveness ( 4.762) E COOPERATION / INTERNAL COMPETITION   Manager Cooperation 42.857 C  Conflict Resolution 50.000 C Net Cooperation / Internal Competition 47.321 C Net Gain (Loss) 34.841 C

  29. Consolidated Statements of Operating Dynamic Gamma, Inc. Gain (Loss) 06/2008Score %Level CORPORATE DECISIVENESS % of Max (Min) A – G Need for Consensus 21.429 D Move to Decision 0.000 D Move to Action 28.571 C Manager Confidence 71.429 B Net Corporate Decisiveness 27.679 C

  30. Consolidated Statements of Operating Dynamic Alpha Detector Balance Sheet 06/2008 Score %Level % of Max (Min) A - G PERFORMANCE MANAGEMENT Vision of Future (33.336) F Goal Definition (41.669) F Action Plans (50.000) F Plans Communicated (54.169) G Understanding Personal Contribution 33.333 C Decisions Implemented (20.838) E Decisions Followed Up (62.500) G Planning/Envisioning Capability 20.825 D Appropriate KPI's Measured (62.500) G Performance Management Balance (35.928) F TALENT MANAGEMENT Attracting / Hiring (66.667) G Leadership Development (58.338) G Retention (41.667) F Out-Placement (29.167) F Leadership Skills (33.350) F Individual Development Plans (50.000) F Talent Management Balance (46.414) F LEAN OPERATIONS Competitive Information (25.000) E Efficiency Improvement Efforts ( 4.170) E Implementation of Improvements (16.662) E Lean Operations Balance (13.542) E PROFITABILITY/GROWTH Growth (58.350) G Profitable Growth Focus (20.838) E Profitability / Growth Balance (28.340) F CUSTOMER ORIENTATION Customer Communication (37.500) F Enhancement of Customer Service 4.167 D Customer Experience (45.829) F Knowledge of Customer Wants (25.000) E Customer Orientation Balance (18.054) E INNOVATION Innovation Encouraged (20.833) E Purposeful Innovation (37.500) F Innovation Balance (29.167) F Total Assets (Liabilities) (31.633) F

  31. FitzGerald Associateswww.ManagementConsultants.com The Discovery Process Feet to the Fire

  32. Consolidated Statements of Operating DynamicBeta Food Company Gain (Loss) ScoreLevel % of Max (Min) A – G CORPORATE DECISIVENESS Need for Consensus 16.670 D  C Move to Decision 25.000 D  C Move to Action 33.335 C  B Manager Confidence 41.670 C B Net Corporate Decisiveness 29.168 C B ACKNOWLEDGEMENT OF WORK   Communication Re Work 33.337 C  B Quality of Evaluations 58.333 B  C Appreciation 50.000 C B Net Acknowledgement of Work 46.529 C B ACCOUNTABILITY Peer Accountability 41.666 C  B Frequency of Reporting 0.000 D  B Deadline Enforcement 83.333 A A Net Accountability 44.443 C B Net Gain (Loss) 40.093 C B

  33. FitzGerald Associateswww.ManagementConsultants.com The Discovery Process & Action Plans

  34. FitzGerald Associateswww.ManagementConsultants.com • PERFORMANCE MANAGEMENT The most important of the six Critical Functions. It is a complex function, comprised of more than twenty elements, ranging from strategic vision to action plan development to follow up. In this survey we address nine. This Function is driven primarily by the Corporate Decisiveness component (generator) of the Gain and Loss statement (G&L). It has a possible range of 90.000 +/-. The Overall score for this Critical Function is 17.857 This indicates a weak positive pressure on the business. Level D 19.841% CEO: 6/25/08 . - Create with senior managers a “business blueprint”. Issue to all management ranks for discussion. 7/24/08 - Rank order all immediate reports (and theirs) and review with board in special session. Make hire and outplace decisions and implement. COO – Incompetence is tolerated too long. 7/24/08 - Rank order all immediate reports. CMO 7/24/08 - Rank order all immediate reports. CFO 7/01/08 – review report against financials and financial model and reconsider forecasts. Review with CEO and team. 7/24/08 - Rank order all immediate reports

  35. FitzGerald Associateswww.ManagementConsultants.com Vision of Future: As acknowledged and bought into by managers and supervisors. It has a possible range of 11.000 +/-. The score for this element is 2.357. LEVEL D 21.429% CEO • 7/15/08 With team, create a business blueprint and action steps and discuss in detail with subordinates. Obtain their input and make changes as appropriate.

  36. Questions?

  37. FitzGerald Associateswww.ManagementConsultants.com Wrap Up

  38. Wrap Up I • The 6 CFs constitute the Balance Sheet • The 9 Generators constitute the G&L • Negatives are where you find the motivation to change

  39. Wrap Up II The Balance Sheet and P&L Show • The Trajectory of the Company • The root causes of performance • What needs to be changed • Where to get the greatest return on effort

  40. Wrap Up III The Rewards An improvement of 25% in three Critical Functions results in a 40% increase in financial returns.(LSE/McKinsey) (High Performers as well as troubled) The cost is virtually ZERO The FIRST YEAR ROI extraordinary

  41. Question What would it mean to you If your company /client Increased profits by only 10%?

  42. FitzGerald Associates www.ManagementConsultants.com Since 1976

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