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The Case of the Pricing Predicament Loading.As soon as Scott Palmer’s secretary told him that Joanne Braker from Occidental Aerospace was on the phone, he knew he was in for a long day.

Inheriting the Occidental account had helped him earn top sales commissions last year, his first at Standard Machine Corporation How to purchase custom engineering case study British Academic US Letter Size Custom writing.Inheriting the Occidental account had helped him earn top sales commissions last year, his first at Standard Machine Corporation.

But a month ago, Joanne informed Scott of the purchasing department’s new, more aggressive competitive bid policy, and said it would apply to the acquisition of a computerized milling machine for Occidental’s new training center.Scott nevertheless submitted his $429,000 proposal with great confidence and even boasted to his regional sales manager that the deal was “in the bag Need to buy a engineering case study PhD 72 pages / 19800 words A4 (British/European) APA.Scott nevertheless submitted his $429,000 proposal with great confidence and even boasted to his regional sales manager that the deal was “in the bag.” After two weeks of unreturned phone calls, however, Scott got the feeling his confidence had been sorely misplaced Need to buy a engineering case study PhD 72 pages / 19800 words A4 (British/European) APA.” After two weeks of unreturned phone calls, however, Scott got the feeling his confidence had been sorely misplaced.What’s up?” Joanne got right to the point who can do a college legal issues thesis proposal 23 pages / 6325 words PhD single spaced.What’s up?” Joanne got right to the point.“Scott, I’ve got a $22,000 problem you can solve.” “What do you mean?” “You know we have to look hard at a number of different vendors on purchases of this size.

And your bid is well above the competition’s.

Kakuchi came in under $390,000, and Akita Limited at a little over 400K.” She waited, and Scott waited back, not wanting to show his anxiousness.“The way I count it,” she finally continued, “you’re $22,000 too high, and I just can’t sell that here.” “Well, Joanne, you get what you pay for in this world.You know that Standard’s got the best machine tool equipment in the world.

Not to mention our service and training.So we have to sell at sensible list prices, no more no less, if we want to keep providing the kind of products and service you expect from us.” Scott began to recount Occidental’s long and fruitful relationship with Standard, and the unmatched performance of its milling, grinding, and boring machines.“Scott, you don’t have to sell me on your equipment,” she said.

“And you understood what the new bidding policies meant when we announced them.We’re under the gun to cut costs, so we have to look at other suppliers.I just can’t budge on this till you come down to the middle someplace.” Actually, Scott had always wondered just when Standard’s fixed-price policy would meet strong resistance from a customer, but he had not expected complaints from Occidental.

That company had maintained its manufacturing edge by investing in the sort of state-of-the-art automation Standard provided, and it had installed virtually nothing but Standard equipment for more than 20 years.Scott told Joanne he appreciated her problem and her frankness about the other bids.But he continued to argue Standard’s case.“We ship a lot more equipment than the others,” he maintained, “and we ship it on time.And you’ve seen how we train your operators and hang around after installation until everyone’s up to speed.” “Akita and Kakuchi say they will too,” Joanne replied firmly.“I should tell you they both provided some pretty convincing testimony from other U.” “I don’t want to knock Akita,” Scott responded.But how reliable will it be in a crunch? What would it have done when you bumped up against capacity last year? Installed practically overnight like we did? It would have had to train your staff in Japanese in 24 hours.“It’s awfully far away when you’re in a bind.

” “It’s true that none of Akita’s customers have plants that are as big as ours, or that seem to be growing as fast,” she conceded.“By the way, did you take a long hard look at Kakuchi’s software?” Scott bore in.“If your people can figure out how to use it, they’ll get a Nobel Prize.Its training division is almost nonexistent.And I hear some of Kakuchi’s European customers call their field service group, ‘field circus.

That’s why we’re hoping to get you close to Akita’s bid.” “Pretty good isn’t good enough, Joanne.

I’m sure the rest of purchasing knows that.And do you think the guys in manufacturing want to compromise on quality to save 5% on a piece of equipment?” “Look, Scott,” she said, “we all know what we know.You know Akita’s solid, and so is its equipment.And its managers know there’s a lot of potential business in the two plants we’re planning to build over the next four years.

Everybody in the industry knows those plants are on the drawing board.So it’s really a question of your attitude toward the future, not just the quoted price on one piece of equipment.” Joanne said the deadline for final bids was in two weeks.Scott explained to her that he couldn’t give an inch on price unless he could convince his regional manager, Tony Della Pena.

Scott hung up, and his mind turned immediately to the office down the hall.

He wondered whether a carefully worded memo to Tony might not get better results than simply walking into his office.But because he felt he was battling the clock, Scott went straight to Tony and briefed him on the conversation with Joanne, finally suggesting that Standard rebid at $407,000.Tony held firm on the original proposal.“Scott, you’ve done great work in a year, really first rate.But if you’d been selling for us a little longer, you’d understand why we don’t dicker with our prices, even slightly.

” “But Tony, think about those two new plants.Joanne practically promised us that business for $22,000 less on this deal.It doesn’t seem smart to let Occidental get experience with other equipment and suppliers now.I’ve seen the new products from Akita and Kakuchi.

The software on the A71 looks pretty damn good.

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And Akita hasn’t been so terrible on service in the U.since it built those field centers here.” “I wasn’t aware of that,” Scott said sheepishly Given the overall indifference to pecking order, anyone making a case for change   it was clear early on that managers would need help adopting the new standards,   business functions and a tech managers survey (TMS) for the engineers..

” “I wasn’t aware of that,” Scott said sheepishly.

“But there’s a lot more to this business than price,” Tony continued.Of course we want Occidental’s long-term business, but we can’t let every customer nickel-and-dime every bid 21 Jun 2016 - Writing a strong and complete business case can make all the difference.   We also provide an outline for the business case template.   In effect, sensitivity analysis lets the project accountant experiment with possible scenarios.   is to be financed and whether a decision to buy, lease, or outsource should  .Of course we want Occidental’s long-term business, but we can’t let every customer nickel-and-dime every bid.Do that, and you might as well be selling sheet steel.

But it’s not as if we’re losing money with $407,000.And we may lose a big account just as it’s about to get a lot bigger.” “Scott, you know how this company got where it is.Standard is founded on quality and reliability.

We can’t stay ahead of the curve if our prices don’t support our development costs.How many man-years do you think went into building the software for our 1052? Or into upgrading it to work with new production processes? And you know what we spend on customer service.That’s why we’ve had Occidental’s business for all these years—by thorough installation, training, by rushing spare parts to them.“By paying our salespeople enough to know what’s going on with our customers.It’s not to Occidental’s advantage for us to cut prices if it means it’ll lose its manufacturing edge in the future.But right now Occidental doesn’t seem to value our service and support as much as the money it wants to save.Couldn’t you at least go talk with Bob Davis about making one minor adjustment to the fixed-price policy?” Davis was corporate vice president for sales.

“I’m not going up the line to argue for an exception to a policy that’s been around a lot longer than either of us have.“This is an old company, and a successful one.You don’t go running to the fourteenth floor every time you get a decision you don’t like, Scott.Why don’t you see what else you can do for Occidental instead of complaining to me about our pricing policies?” Scott got the message and started toward the door, remarking as casually as he could, “Winter is coming, Tony.

And those new Occidental plants could bring us some pretty nice rays.” Back in his office, Scott gathered evidence for the memo he realized he should have sent Tony in the first place.Tony had chided him in the past about being too impatient to close a deal in a business where the sales cycle tended to be long.Scott thumbed through trade magazines for articles on the Asian invasion and sent his secretary to the copy machine loaded with nightmare stories about the dwindling market share of established U.

manufacturers in industries like Standard’s.By quitting time, Scott had completed a succinct memo that outlined to Tony three possible compromises on Standard’s fixed-price policy.For Occidental only, Standard would rechristen the 1052 as the 1052X, change the color of the control panel from gray to blue, make a few other cosmetic changes, reduce the motor’s power slightly, and offer the revised machine at $407,000.

Standard could rebundle the 1052 service package to justify the $407,000 price tag.This would mean eliminating the usual one week of on-site operator training and cutting back the time troubleshooters would remain at the facility after installation from two weeks to one.In addition, it could trim the “free” six-month service period to two months.A modified combination of the first two alternatives could also cost $407,000.As an addendum, Scott wrote a brief analysis of encroaching global competition, supporting his arguments with the articles from the trade press.He also reminded Tony about the recent Munich trade show, where other salespeople had complained of losing large accounts because of price competition, particularly from Akita.Scott thought his arguments were solid, but Tony had to decide where to go from here.“Buck” Rogers spent 34 years with IBM before he retired in 1984 as vice president of marketing.He lectures widely on management topics, and is the author of The IBM Way and Getting the Best Out of Yourself and Others.This is not just an argument about price.This is a multi-faceted argument about a policy deeply engrained in Standard that has probably been critical to its success over the years.

This situation also involves the need to sell value and a manager who has not done a good job of training his field people.Scott is obviously trying to circumvent the fixed-price policy and take the easy road to selling.He wants Occidental’s business at any price and without having to do his homework.Occidental is changing its procurement policies.

The company now requires multiple bidders.Joanne’s in purchasing, and that’s the line.Occidental clearly likes and prefers Standard and wants Standard to get the business.Why else would Joanne tell Scott precisely how much he has to come down in price? More important, Joanne’s proposed new price is still above Akita’s bid of “a little over $400,000” and Kakuchi’s bid of “a little under $390,000.” Standard doesn’t really have to be in “the middle someplace.

” In short, Occidental agrees with Scott’s pitch about Standard’s superior package.Scott is not solving any problems for Tony.Tony won’t submit Scott’s proposals to headquarters.He’s no dummy; he knows that headquarters will see Scott’s modifications as price cuts that are not very well disguised.

A proposal to Bob Davis that cavalierly undercuts the fixed-price policy would make Tony look foolish, which presumably he is not.He might talk over some alternatives or strategies with his boss, but Tony is not going to make a formal proposal or forward Scott’s memo.On the other hand, the new competition is real.A valued customer is behaving differently, and the threat posed by Japanese suppliers cannot be ignored.And the pressures are being felt by other salespeople as well.

Of course, we shouldn’t take the Munich trade-show complaints at face value.Just because a salesman says he lost business to a lower bid doesn’t mean that’s why it was lost.

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What else is he going to say? “I lost it because I screwed up.” Finally, Scott’s selling approach is all wrong.He commits the cardinal sin of selling someone else’s weakness rather than the bottom-line value of doing business with Standard 24 Jul 2013 - One of the core teaching methods, pioneered by Harvard Business School, is the case method.   case studies they think are the most essential for future business   management programs at Harvard and Stanford so they could better   standing acquisition strategy of buying small innovative startups and  .He commits the cardinal sin of selling someone else’s weakness rather than the bottom-line value of doing business with Standard.

Also, he tells the customer that the responsibility for getting action is out of his hands.Let’s step back from the facts of the case and consider the situation on a more general level.In today’s tough and demanding marketplace, industrial customers want to negotiate, and when the deal is significant enough, you can be sure Standard will reevaluate its position How to write an case study engineering Freshman Harvard American 33 pages / 9075 words.

In today’s tough and demanding marketplace, industrial customers want to negotiate, and when the deal is significant enough, you can be sure Standard will reevaluate its position.

What will happen when Occidental builds its new plants? The capital budget for machinery is surely going to be several million dollars—probably tens of millions.Every supplier, including Standard, will at least consider negotiating terms on a project like that, even in an environment where price competition isn’t heating up domainsbuyingselling.com/thesis/best-website-to-purchase-a-college-literature-thesis-double-spaced-48-hours-high-school-online.Every supplier, including Standard, will at least consider negotiating terms on a project like that, even in an environment where price competition isn’t heating up.But the negotiating will not be done by Scott or Tony alone.It will also involve Bob Davis or the president of Standard, working with their counterparts at Occidental.

Scott and Tony will draw up a detailed assessment of the customer’s specifications, delivery requirements, and other factors, and then higher level executives will actually do the deal.

Or consider an even more basic question: Why would any company selling big-ticket industrial items have such a rigid pricing policy in the first place? The explanation is not simply Tony’s concerns about destabilizing competition and sheet steel, though that may be important.Rather, the fixed-price policy sends an unequivocal message to the sales organization: you must know your prospects and customers so well, and get into every nook and cranny of an account so deeply and continuously, that you understand the customer’s business, its people, its problems, its needs, and its strategic thinking more thoroughly than any other supplier—perhaps even more thoroughly than the customer itself.This means the sales organization will be able to help customers define their needs, design their plant layouts, train their employees, support their manufacturing systems.That is, Standard will provide such a high level of service that no other supplier will win on price alone.It is a working partnership based on solution selling.

If Tony had properly inculcated his salespeople, Scott wouldn’t be suggesting these phony shortcuts.Tony had many chances in his discussion of the Occidental bid to “train” Scott.He could have asked questions like: Who are the real decision makers outside of purchasing? What does Occidental’s engineering department have to say? Who have you been talking with in manufacturing? How do they feel about our products, especially the ones they bought last year? What kind of calls have our service people been getting from Occidental? Any troubles? Any really good things we’ve done for them recently? In short, Tony is not using the non-negotiation policy to do what it’s designed to do—namely, to force the salespeople deep into the business of prospects and existing accounts, to create intricate and intimate partnerships.Scott seems to work only through Joanne.Admittedly, many companies don’t want salespeople getting inside their organizations, or insist on carefully screened relationships.

But with complicated, big-ticket investments they do want help from sales reps.Scott doesn’t even mention what else he’s doing at Occidental, and Tony doesn’t ask.Indeed, the problems with the Standard sales organization seem pretty serious.For example, this milling machine is for Occidental’s “new training center.” Well, shouldn’t Standard try to help here? Maybe it shouldn’t even sell the machine, but give it to Occidental—ostensibly for joint learning about its use and as a pilot installation for Standard’s own reexamination of its training of machine operators.

After a few years, Occidental could return the machine or buy it for half the original price.Finally, Standard might consider an entirely different strategy for this particular account in this particular situation.Tony could make a pretty good case for going back to Occidental and withdrawing the bid.He could argue, in effect, the following: “We can’t and won’t go below $429,000.Not because of our no-discounting policy but because if we went below what we think is the right price, we’d have to cut corners on what we do for you, and we just don’t think that’s right.

If we have to come down in price, we’d just as soon not bid.” None of this is to ignore the transformation and the globalization of competition facing Standard Machine.We don’t have enough information in the case to deal with that.But we do have enough to see that this is, in the first instance, not a problem of global competition, but of sales-force management.

The key is to understand the customer’s requirements, have broad management coverage, and put together a cost-justified solution that truly conveys value-added marketing.Bruce Moore has been president and CEO of H.of Farmington, Michigan since it was founded in 1971.

He is also a director of the National Machine Tool Builders Association.Standard will lose the order from Occidental unless it modifies its pricing policy.It might also lose the chance to sell millions of dollars of machine tools for Occidental’s proposed new plants.And it will have opened the gates even wider to its foreign rivals.Occidental is willing to throw out Kakuchi’s bid.But Akita Limited is producing decent equipment.Without some movement by Standard, Akita will get the Occidental order.And if Akita gets its foot in Occidental’s door, it will be there forever.Standard must either change its pricing policy now or change it later—and under less favorable circumstances.The entire machine tool industry, like other U.manufacturing industries, faces a very different marketplace from what it faced 15 years ago.The industry must adjust its product and marketing strategies to meet the demands of an international economy.Put simply, the days of non-negotiable prices are over.But Standard’s marketing executives have not convinced top management that the company is competing in a different environment.

Standard has a good opportunity with Occidental to adjust its pricing policy.

The relationship between the two companies has been long and mutually rewarding.Occidental clearly prefers to do business with Standard.That’s why Joanne disclosed to Scott the identities and prices of his competitors.But Scott is a young salesman trapped by inexperience.He was unprepared to deal with Occidental’s new policy of soliciting multiple bids.

His response was to knock the competition, always a bad idea.

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His arguments to Joanne in defense of Standard’s marketing policies were inappropriate and fruitless.How do you quantify “sensible list prices”? After Joanne freely offered information about competing bids, Scott did not seek additional information about alternatives to the $22,000 price cut that might improve Standard’s position.The real problem at Standard is Tony, the middleman between the sales force in the field and upper management Teaching Materials Using Case Studies by Claire Davis and Elizabeth Wilcock.   This guide explores the use of the case-based approach to support engineering education and,   of student performance against a set of predetermined standards).   the group do not provide any input or aid the group effort yet still get marks..The real problem at Standard is Tony, the middleman between the sales force in the field and upper management.

One of Tony’s jobs is to sell products to the customer.

But he has another job which is just as important, if not more so.That is to sell the customer—its conditions, needs, performance requirements, attitudes—to top management Most Important MBA Case Studies Business Insider.That is to sell the customer—its conditions, needs, performance requirements, attitudes—to top management.He reiterates old company policies to Scott help me with a custom geology coursework Master's A4 (British/European) two hours.He reiterates old company policies to Scott.He shows little concern for the possible loss of a good customer due to changing competitive conditions.

He doesn’t recognize that this is an important sales problem he should take to his superiors.Standard’s top managers appear to be quite competent.Their policies have produced high-quality products and excellent service support to customers.Standard has an excellent record of on-time deliveries—no small accomplishment in today’s machine tool industry.With this demonstrated capability, I cannot believe they would not listen to reasonable arguments about adjusting the fixed-price policy.

One strategy Tony should consider taking to Bob Davis is a variant of what Scott proposed in his memo.Occidental is looking for greater perceived value.If Standard were to set separate prices for the components of the milling-machine package—that is, unbundle the final price—Occidental could compare relative values.And Scott could talk Joanne about these individual prices and what really mattered to Occidental.For example, the Standard personnel who “hang around after installation until everyone’s up to speed” may not be as important to Occidental as Standard thinks.

There could be negotiated reductions of how long these people remain on-site.Should Occidental later need more training, it could pay extra.In all probability, these training costs would not be as much as what Standard has factored into its current price.There are certain compromises Tony should not suggest to Davis.For example, he should not propose shortening the free service period, since this would considered a decrease in value by Occidental.

Nor should he gimmick up the machine with paint jobs, less horsepower, and cosmetic changes like Scott suggests.Occidental is very familiar with Standard’s products, would spot the changes instantly, and would perceive a decrease in value.These and other price reduction ideas may not make the entire 5% difference.Good enough! Tony will have to sell Bob Davis on the idea that Standard’s management can find the rest in cost reductions not affecting quality or performance.

Surely this is not an insurmountable challenge for a machine tool company that wants to be around in the future.Lindgren is president and CEO of Cross & Trecker Corporation of Bloomfield Hills, Michigan, the largest producer of machine tools in the United States.This is a case study of a company headed for trouble—not because it won’t negotiate prices, and not even because of the appearance of foreign competition.Rather, it is headed for trouble because the sales organization isn’t doing what Standard’s pricing policy is designed to have it do, whether that relates to domestic or foreign competition.

In fact, price may not be the critical issue this case from either Standard’s or Occidental’s point of view.The real question is value—and that is measured not in terms of initial price but in terms of the effect that Standard’s equipment will have on Occidental’s operations over the longer term.The key for Standard is not just to make the sale, which appears to be Scott’s only concern.In fact, Scott has no understanding of what the company’s overall operating rationale really is.This is even more dismaying since he is able to summon clippings of the coming Japanese competition in order to undermine the rationale and price policy—when the policy may be the company’s best competitive weapon to deal with foreign competition.

What the case really illustrates (more by what isn’t in it than by what is) is the critical relationship between industrial suppliers and purchasers.This relationship is especially important in industries where equipment is highly complex, takes new forms, and requires a great deal of training and service.It is even more critical in industries where foreign competition is threatening to disrupt or challenge traditional ways of doing business—ways that have made sense for both supplier and customer.In those situations, which are increasingly prevalent in American industry, a close working relationship between supplier and customer is the key to sustained competitive performance for both parties.

It is out of such cooperative relationships that technological improvements flow to lower parts cost, improve quality, and reduce working capital needs.

The purpose of Standard’s policy on price is to force the company to pursue these kinds of relationships.It is designed to make the salespeople work closely and cooperatively with the customer so that they understand each other’s needs and interests, rather than haggle over price.When the policy works, it is the best weapon that both supplier and customer have against a foreign invasion, which usually begins on the basis of price.The tragedy of this situation is that neither Scott nor Tony appreciates the real meaning of the warning of foreign competitors, nor its relationship to and the real value of Standard’s pricing policy.With sophisticated equipment like machine tools, sales is not just about sales, any more than engineering is just about engineering.

Everything has to work together because, as this case shows, business is all about getting and keeping a competitive edge—and that cannot be done based on price alone.Sure, the seller has to be reasonably price competitive.But it also has to make enough money to be able to support the kind of R&D that will constantly help keep itself and its customers competitive.In this case the customer seems to understand that; it is not asking for a low-ball bid.But the sales organization clearly isn’t doing its part.

William Whitescarver is president of the Bindery & Forms Press Division of Harris Graphics, a subsidiary of AM International based in Dayton, Ohio.Standard Machine has created for itself an opportunity to fail with a major customer.How did this unenviable situation come to pass? Let’s look at how Scott and Tony have handled a major change in purchasing policies by one of Standard’s most important customers.Occidental first announced its new, competitive-bid policy a month ago, but there was virtually no reaction from Scott.He never even bothered to discuss the new policy with Tony until Joanne told him he had to come down in price.

In fact, he threw Tony off base with his “it’s in the bag” comment.Scott apparently did not appreciate the gravity of the competitive message being sent by Joanne.Earlier and more serious attention to the competitive-bid policy would have allowed Standard to prepare a more effective response.

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Scott also stumbled by telling Joanne that only Tony could make a decision on price changes.This is a tactical error that gives Joanne an opening to go directly to Tony, the person with pricing authority.

Of course, Tony has made blunders of his own .Of course, Tony has made blunders of his own.

He has information about the competition (for example, Akita’s new U.field centers) that he has not shared with Scott.Such information might have caused Scott to be more concerned than he was about the pending Occidental order.

Tony views Scott as an impatient rookie.He makes it clear that Scott does not control the Occidental business, but offers no creative help with this major account domainsbuyingselling.com/coursework/need-to-purchase-an-transportation-law-coursework-40-pages-11000-words-academic-apa-at-an-affordable-price.He makes it clear that Scott does not control the Occidental business, but offers no creative help with this major account.Moreover, Tony seems insecure about his own position.Why doesn’t he advise Bob Davis of the Occidental dilemma and discuss the growing strengths of the competition and possible responses? Standard has a very high regard for its position in the industry.According to Tony, it has the best equipment, service, and training.

Its business is founded on quality and reliability, so it can command a premium for its product.All of this may be true, or may have been true, but it also has the ring of marketplace arrogance—which typically leads to a false sense of security, lost orders, and declining market share.Despite his shaky start, Scott has come up with some workable alternatives for handling the Occidental bid.Equipment changes, alterations to the service and training package, and/or reduction of the warranty would likely be acceptable to a customer completely familiar with Standard’s equipment.

This would also protect Standard’s fixed-price policy.Joanne has clearly opened the door for a price above $407,000.She seems willing to work with Scott to develop a mutually acceptable plan.Scott, Tony, and Bob Davis need to coordinate their efforts and educate senior management that Standard is facing the same competitive pressures as Occidental.

It is time for Standard to install cost-reduction programs of its own.These programs should in turn be reflected in product pricing.Standard should prepare sales tactics and selling strategies that will develop continuous business, not just look at customers order by order.If done well, the long-established, fixed-price policy can remain a major positive selling tool for Scott and his colleagues at Standard Machine.A version of this article appeared in the March 1988 issue of Harvard Business Review.

Mary Karr has been a research consultant at the Harvard Business School and a marketing and communications manager for several high-tech companies.She now heads her own research and writing firm.This article is about PRICING How Google Sold Its Engineers on Management Reprint: R1312D High-performing knowledge workers often question whether managers actually contribute much, especially in a technical environment.Until recently, that was the case at Google, a company filled with self-starters who viewed management as more destructive than beneficial and as a distraction from “real work.

” But when Google’s people analytics team examined the value of managers, applying the same rigorous research methods the company uses in its operations, it proved the skeptics wrong.

Mining data from employee surveys, performance reviews, and double-blind interviews, the team verified that managers indeed had a positive impact.It also pinpointed exactly how, identifying the eight key behaviors of great Google managers.In this article, Harvard Business School professor Garvin describes how Google has incorporated the detailed findings from the research into highly specific, concrete guidelines; classes; and feedback reports that help managers hone their essential skills.Because these tools were built from the ground up, using the staff’s own input, they’ve been embraced by Google employees.Managers say that they’ve found their training to be invaluable, and managers’ ratings from direct reports have steadily risen across the company.

Artwork: Chad Hagen, Graphic Composition No.1, 2009, digital Since the early days of Google, people throughout the company have questioned the value of managers.That skepticism stems from a highly technocratic culture.As one software engineer, Eric Flatt, puts it, “We are a company built by engineers for engineers.” And most engineers, not just those at Google, want to spend their time designing and debugging, not communicating with bosses or supervising other workers’ progress.

In their hearts they’ve long believed that management is more destructive than beneficial, a distraction from “real work” and tangible, goal-directed tasks.A few years into the company’s life, founders Larry Page and Sergey Brin actually wondered whether Google needed any managers at all.In 2002 they experimented with a completely flat organization, eliminating engineering managers in an effort to break down barriers to rapid idea development and to replicate the collegial environment they’d enjoyed in graduate school.That experiment lasted only a few months: They relented when too many people went directly to Page with questions about expense reports, interpersonal conflicts, and other nitty-gritty issues.And as the company grew, the founders soon realized that managers contributed in many other, important ways—for instance, by communicating strategy, helping employees prioritize projects, facilitating collaboration, supporting career development, and ensuring that processes and systems aligned with company goals.

Google now has some layers but not as many as you might expect in an organization with more than 37,000 employees: just 5,000 managers, 1,000 directors, and 100 vice presidents.It’s not uncommon to find engineering managers with 30 direct reports.Flatt says that’s by design, to prevent micromanaging.“There is only so much you can meddle when you have 30 people on your team, so you have to focus on creating the best environment for engineers to make things happen,” he notes.Google gives its rank and file room to make decisions and innovate.

Along with that freedom comes a greater respect for technical expertise, skillful problem solving, and good ideas than for titles and formal authority.Given the overall indifference to pecking order, anyone making a case for change at the company needs to provide compelling logic and rich supporting data.Seldom do employees accept top-down directives without question.Google downplays hierarchy and emphasizes the power of the individual in its recruitment efforts, as well, to achieve the right cultural fit.Using a rigorous, data-driven hiring process, the company goes to great lengths to attract young, ambitious self-starters and original thinkers.

It screens candidates’ r sum s for markers that indicate potential to excel there—especially general cognitive ability.People who make that first cut are then carefully assessed for initiative, flexibility, collaborative spirit, evidence of being well-rounded, and other factors that make a candidate “Googley.” So here’s the challenge Google faced: If your highly skilled, handpicked hires don’t value management, how can you run the place effectively? How do you turn doubters into believers, persuading them to spend time managing others? As it turns out, by applying the same analytical rigor and tools that you used to hire them in the first place—and that they set such store by in their own work.You use data to test your assumptions about management’s merits and then make your case.Analyzing the Soft Stuff To understand how Google set out to prove managers’ worth, let’s go back to 2006, when Page and Brin brought in Laszlo Bock to head up the human resources function—appropriately called people operations, or people ops.

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From the start, people ops managed performance reviews, which included annual 360-degree assessments.It also helped conduct and interpret the Googlegeist employee survey on career development goals, perks, benefits, and company culture.A year later, with that foundation in place, Bock hired Prasad Setty from Capital One to lead a people analytics group Pratt Whitney Engineering Standard Work Case Harvard nbsp.A year later, with that foundation in place, Bock hired Prasad Setty from Capital One to lead a people analytics group.

He challenged Setty to approach HR with the same empirical discipline Google applied to its business operations.Setty took him at his word, recruiting several PhDs with serious research chops Solutions to Four Harvard Business Review (HBR) Case Studies - Boise   Boise could at maximum claim a price of 1.04m, then they could get the order   Mister Jennings (Corporate Standards) : Evaluation of suppliers regarding   staff of Boise should be connected with finance staff of Northern, so the engineers, etc.)..

Setty took him at his word, recruiting several PhDs with serious research chops.

This new team was committed to leading organizational change Solutions to Four Harvard Business Review (HBR) Case Studies - Boise   Boise could at maximum claim a price of 1.04m, then they could get the order   Mister Jennings (Corporate Standards) : Evaluation of suppliers regarding   staff of Boise should be connected with finance staff of Northern, so the engineers, etc.)..This new team was committed to leading organizational change.“I didn’t want our group to be simply a reporting house,” Setty recalls.“Organizations can get bogged down in all that data.Instead, I wanted us to be hypothesis-driven and help solve company problems and questions with data.” People analytics then pulled together a small team to tackle issues relating to employee well-being and productivity.

In early 2009 it presented its initial set of research questions to Setty.One question stood out, because it had come up again and again since the company’s founding: Do managers matter? To find the answer, Google launched Project Oxygen, a multiyear research initiative.It has since grown into a comprehensive program that measures key management behaviors and cultivates them through communication and training.By November 2012, employees had widely adopted the program—and the company had shown statistically significant improvements in multiple areas of managerial effectiveness and performance.Google is one of several companies that are applying analytics in new ways.

Until recently, organizations used data-driven decision making mainly in product development, marketing, and pricing.But these days, Google, Procter & Gamble, Harrah’s, and others take that same approach in addressing human resources needs.(See “Competing on Talent Analytics,” by Thomas H.Davenport, Jeanne Harris, and Jeremy Shapiro, HBR October 2010.

) Unfortunately, scholars haven’t done enough to help these organizations understand and improve day-to-day management practice.

Compared with leadership, managing remains understudied and undertaught—largely because it’s so difficult to describe, precisely and concretely, what managers actually do.We often say that they get things done through other people, yet we don’t usually spell out how in any detail.Project Oxygen, in contrast, was designed to offer granular, hands-on guidance.It didn’t just identify desirable management traits in the abstract; it pinpointed specific, measurable behaviors that brought those traits to life.“Engineers hate being micromanaged on the technical side but love being closely managed on the career side.

” That’s why Google employees let go of their skepticism and got with the program.Project Oxygen mirrored their decision-making criteria, respected their need for rigorous analysis, and made it a priority to measure impact.Data-driven cultures, Google discovered, respond well to data-driven change.Making the Case Project Oxygen colead Neal Patel recalls, “We knew the team had to be careful.Google has high standards of proof, even for what, at other places, might be considered obvious truths.

Simple correlations weren’t going to be enough.So we actually ended up trying to prove the opposite case—that managers don’t matter.” To begin, Patel and his team reviewed exit-interview data to see if employees cited management issues as a reason for leaving Google.Though they found some connections between turnover rates and low satisfaction with managers, those didn’t apply to the company more broadly, given the low turnover rates overall.

Nor did the findings prove that managers caused attrition.As a next step, Patel examined Googlegeist ratings and semiannual reviews, comparing managers on both satisfaction and performance.For both dimensions, he looked at the highest and lowest scorers (the top and bottom quartiles).Essential Background “At first,” he says, “the numbers were not encouraging.Even the low-scoring managers were doing pretty well.

How could we find evidence that better management mattered when all managers seemed so similar?” The solution came from applying sophisticated multivariate statistical techniques, which showed that even “the smallest incremental increases in manager quality were quite powerful.” For example, in 2008, the high-scoring managers saw less turnover on their teams than the others did—and retention was related more strongly to manager quality than to seniority, performance, tenure, or promotions.The data also showed a tight connection between managers’ quality and workers’ happiness: Employees with high-scoring bosses consistently reported greater satisfaction in multiple areas, including innovation, work-life balance, and career development.In light of this research, the Project Oxygen team concluded that managers indeed mattered.But to act on that finding, Google first had to figure out what its best managers did.

So the researchers followed up with double-blind qualitative interviews, asking the high- and low-scoring managers questions such as “How often do you have career development discussions with your direct reports?” and “What do you do to develop a vision for your team?” Managers from Google’s three major functions (engineering, global business, and general and administrative) participated; they came from all levels and geographies.The team also studied thousands of qualitative comments from Googlegeist surveys, performance reviews, and submissions for the company’s Great Manager Award.(Each year, Google selects about 20 managers for this distinction, on the basis of employees’ nominations.) It took several months to code and process all this information.After much review, Oxygen identified eight behaviors shared by high-scoring managers.

(See the sidebar “What Google’s Best Managers Do” for the complete list.) Even though the behaviors weren’t terribly surprising, Patel’s colead, Michelle Donovan, says, “we hoped that the list would resonate because it was based on Google data.The attributes were about us, by us, and for us.” What Google’s Best Managers Do By examining data from employee surveys and performance reviews, Google’s people analytics team identified eight key behaviors demonstrated by the company’s most effective managers.Empowers the team and does not micromanage (See the sidebar “How Google Defines One Key Behavior”) 3.Expresses interest in and concern for team members’ success and personal well-being 4.Is a good communicator—listens and shares information 6.

Has a clear vision and strategy for the team 8.Has key technical skills that help him or her advise the team The key behaviors primarily describe leaders of small and medium-sized groups and teams and are especially relevant to first- and second-level managers.They involve developing and motivating direct reports, as well as communicating strategy and eliminating roadblocks—all vital activities that people tend to overlook in the press of their day-to-day responsibilities.

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Putting the Findings into Practice The list of behaviors has served three important functions at Google: giving employees a shared vocabulary for discussing management, offering them straightforward guidelines for improving it, and encapsulating the full range of management responsibilities.

Though the list is simple and straightforward, it’s enriched by examples and descriptions of best practices—in survey participants’ own words.These details make the overarching principles, such as “empowers the team and does not micromanage,” more concrete and show managers different ways of enacting them As the engineering of state-of-the-art jet engines becomes more and more complex, Pratt   Case | HBS Case Collection | February 2004 (Revised March 2006)  .These details make the overarching principles, such as “empowers the team and does not micromanage,” more concrete and show managers different ways of enacting them.

(See the exhibit “How Google Defines One Key Behavior.”) How Google Defines One Key Behavior Drawing on companywide survey responses, Google breaks down each essential management behavior into specific activities and best practices Best websites to buy custom case study engineering Undergraduate single spaced ASA British.

”) How Google Defines One Key Behavior Drawing on companywide survey responses, Google breaks down each essential management behavior into specific activities and best practices.

Best practice: Assign stretch assignments to empower the team to tackle big problems “My manager was able to see my potential and gave me opportunities that allowed me to shine and grow Best websites to buy custom case study engineering Undergraduate single spaced ASA British.

Best practice: Assign stretch assignments to empower the team to tackle big problems “My manager was able to see my potential and gave me opportunities that allowed me to shine and grow.

For example, early on in my role, she asked me to pull together a cross-functional team to develop a goal-setting process.I was new to the role, so she figured it would be a great way for me to get to know the team and also to create accountability and transparency.Once it was developed, she sent me to one of our Europe offices—on my own!—to deliver the training to people managers there.” Source:The Google Internal Presentation “Investigating Why Managers Matter and What Our Best Ones Do,” January 2010 The descriptions of the eight behaviors also allow considerable tailoring.They’re inclusive guidelines, not rigid formulas.

That said, it was clear early on that managers would need help adopting the new standards, so people ops built assessments and a training program around the Oxygen findings.To improve the odds of acceptance, the group customized the survey instrument, creating an upward feedback survey (UFS) for employees in administrative and global business functions and a tech managers survey (TMS) for the engineers.Both assessments asked employees to evaluate their managers (using a five-point scale) on a core set of activities—such as giving actionable feedback regularly and communicating team goals clearly—all of which related directly to the key management behaviors.The first surveys went out in June 2010—deliberately out of sync with performance reviews, which took place in April and September.(Google had initially considered linking the scores with performance reviews but decided that would increase resistance to the Oxygen program because employees would view it as a top-down imposition of standards.

) People ops emphasized confidentiality and issued frequent reminders that the surveys were strictly for self-improvement.“Project Oxygen was always meant to be a developmental tool, not a performance metric,” says Mary Kate Stimmler, an analyst in the department.“We realized that anonymous surveys are not always fair, and there is often a context behind low scores.” Though the surveys weren’t mandatory, the vast majority of employees completed them.Soon afterward, managers received reports with numerical scores and individual comments—feedback they were urged to share with their teams.

(See the exhibit “One Manager’s Feedback” for a representative sample.) The reports explicitly tied individuals’ scores to the eight behaviors, included links to more information about best practices, and suggested actions each manager could take to improve.Someone with, say, unfavorable scores in coaching might get a recommendation to take a class on how to deliver personalized, balanced feedback.People ops designed the training to be hands-on and immediately useful.In “vision” classes, for example, participants practiced writing vision statements for their departments or teams and bringing the ideas to life with compelling stories.

In 2011, Google added Start Right, a two-hour workshop for new managers, and Manager Flagship courses on popular topics such as managing change, which were offered in three two-day modules over six months.“We have a team of instructors,” says people-development manager Kathrin O’Sullivan, “and we are piloting online Google Hangout classes so managers from around the world can participate.” Managers have expressed few concerns about signing up for the courses and going public with the changes they need to make.Eric Clayberg, for one, has found his training invaluable.A seasoned software-engineering manager and serial entrepreneur, Clayberg had led teams for 18 years before Google bought his latest start-up.

But he feels he learned more about management in six months of Oxygen surveys and people ops courses than in the previous two decades.“For instance,” he says, “I was worried about the flat organizational structure at Google; I knew it would be hard to help people on my team get promoted.I learned in the classes about how to provide career development beyond promotions.I now spend a third to half my time looking for ways to help my team members grow.” And to his surprise, his reports have welcomed his advice.

“Engineers hate being micromanaged on the technical side,” he observes, “but they love being closely managed on the career side.” Improving Management at Google: An Audio Interview Harvard Business School professor David Garvin interviews Google software-engineering manager Eric Clayberg, a winner of the company’s Great Manager Award.They discuss how Clayberg and others at Google have benefitted from Project Oxygen, an internal research initiative that has evolved into a comprehensive management-feedback and -training program.Download this podcast To complement the training, the development team sets up panel discussions featuring high-scoring managers from each function.That way, employees get advice from colleagues they respect, not just from HR.

People ops also sends new managers automated e-mail reminders with tips on how to succeed at Google, links to relevant Oxygen findings, and information about courses they haven’t taken.And Google rewards the behaviors it’s working so hard to promote.The company has revamped its selection criteria for the Great Manager Award to reflect the eight Oxygen behaviors.Employees refer to the behaviors and cite specific examples when submitting nominations.Clayberg has received the award, and he believes it was largely because of the skills he acquired through his Oxygen training.

The prize includes a weeklong trip to a destination such as Hawaii, where winners get to spend time with senior executives.Recipients go places in the company, too.“In the last round of promotions to vice president,” Laszlo Bock says, “10% of the directors promoted were winners of the Great Manager Award.” Measuring Results The people ops team has analyzed Oxygen’s impact by examining aggregate survey data and qualitative input from individuals.From 2010 through 2012, UFS and TMS median favorability scores rose from 83% to 88%.

The lowest-scoring managers improved the most, particularly in the areas of coaching and career development.The improvements were consistent across functions, survey categories, management levels, spans of control, and geographic regions.In an environment of top achievers, people take low scores seriously.Consider vice president Sebastien Marotte, who came to Google in 2011 from a senior sales role at Oracle.

During his first six months at Google, Marotte focused on meeting his sales numbers (and did so successfully) while managing a global team of 150 people.

Then he received his first UFS scores, which came as a shock.“I asked myself, ‘Am I right for this company? Should I go back to Oracle?’ There seemed to be a disconnect,” he says, “because my manager had rated me favorably in my first performance review, yet my UFS scores were terrible.” Then, with help from a people ops colleague, Marotte took a step back and thought about what changes he could make.

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He recalls, “We went through all the comments and came up with a plan.I fixed how I communicated with my team and provided more visibility on our long-term strategy.

Within two survey cycles, I raised my favorability ratings from 46% to 86%   Find Theses & Conferences · Find Patents · Find Standards · How to cite · Associations & Societies · Mobile Apps   Case studies can be found in various places, including business magazines,   Note that Business Source Complete lists Harvard Business School Cases, but   Purchase cases from commercial publishers..Within two survey cycles, I raised my favorability ratings from 46% to 86%.

I came here as a senior sales guy, but now I feel like a general manager.” Overall, other managers took the feedback as constructively as Marotte did—and were especially grateful for its specificity Where you have several in-text citations together, you should order them in   This Way to Better Streets: 10 Case Studies on Improving Street. Design, London, CABE   If the article is not from a database, you should use the standard URL   business technologies: foundations and   Society of Plastics Engineers. San..” Overall, other managers took the feedback as constructively as Marotte did—and were especially grateful for its specificity.Here’s what Stephanie Davis, director of large-company sales and another winner of the Great Manager Award, says she learned from her first feedback report: “I was surprised that one person on my team didn’t think I had regularly scheduled one-on-one meetings.

I saw this person every day, but the survey helped me realize that just seeing this person was different from having regularly scheduled individual meetings.My team also wanted me to spend more time sharing my vision domainsbuyingselling.com/thesis-proposal/best-websites-to-write-an-gender-studies-thesis-proposal-academic-chicago-one-day-100-original.My team also wanted me to spend more time sharing my vision.Personally, I have always been inspired by Eric Schmidt , Larry, and Sergey; I thought my team was also getting a sense of the company’s vision from them.But this survey gave my team the opportunity to explain that they wanted me to interpret the higher-level vision for them.So I started listening to the company’s earnings call with a different ear.

I didn’t just come back to my team with what was said; I also shared what it meant for them.” Chris Loux, head of global enterprise renewals, remembers feeling frustrated with his low UFS scores.“I had received a performance review indicating that I was exceeding expectations,” he says, “yet one of my direct reports said on the UFS that he would not recommend me as a manager.That struck me, because people don’t quit companies—they quit managers.” At the same time, Loux struggled with the question of just how much to push the lower performers on his team.

“It’s hard to give negative feedback to a type-A person who has never received bad feedback in his or her life,” he explains.“If someone gets 95% favorable on the UFS, I wonder if that manager is avoiding problems by not having tough conversations with reports on how they can get better.” Loux isn’t the only Google executive to speculate about the connection between employees’ performance reviews and their managers’ feedback scores.That question came up multiple times during Oxygen’s rollout.To address it, the people analytics group fell back on a time-tested technique—going back to the data and conducting a formal analysis to determine whether a manager who gave someone a negative performance review would then receive a low feedback rating from that employee.

After looking at two quarters’ worth of survey data from 2011, the group found that changes in employee performance ratings (both upward and downward) accounted for less than 1% of variability in corresponding manager ratings across all functions at Google.“Managing to the test” doesn’t appear to be a big risk, either.Because the eight behaviors are rooted in action, it’s difficult for managers to fake them in pursuit of higher ratings.In the surveys, employees don’t assess their managers’ motivations, values, or beliefs; rather, they evaluate the extent to which their managers demonstrate each behavior.Either the manager has acted in the ways recommended—consistently and credibly—or she has not.

There is very little room for grandstanding or dissembling.This article also appears in: “We are not trying to change the nature of people who work at Google,” says Bock.“That would be presumptuous and dangerous.Instead, we are saying, ‘Here are a few things that will lead you to be perceived as a better manager.’ Our managers may not completely believe in the suggestions, but after they act on them and get better UFS and TMS scores, they may eventually internalize the behavior.

A commitment to managerial excellence can be hard to maintain over the long haul.One threat to sustainability is “evaluation overload.” The UFS and the TMS depend on employees’ goodwill.Googlers voluntarily respond on a semiannual basis, but they’re asked to complete many other surveys as well.

What if they decide that they’re tired of filling out surveys? Will response rates bottom out? Sustainability also depends on the continued effectiveness of managers who excel at the eight behaviors, as well as those behaviors’ relevance to senior executive positions.A disproportionate number of recently promoted vice presidents had won the Great Manager Award, a reflection of how well they’d followed Oxygen’s guidelines.But what if other behaviors—those associated with leadership skills—matter more in senior positions? Further, while survey scores gauge employees’ satisfaction and perceptions of the work environment, it’s unclear exactly what impact those intangibles have on such bottom-line measures as sales, productivity, and profitability.(Even for Google’s high-powered statisticians, those causal relationships are difficult to establish.) And if the eight behaviors do actually benefit organizational performance, they still might not give Google a lasting edge.

Companies with similar competitive profiles—high-tech firms, for example, that are equally data-driven—can mimic Google’s approach, since the eight behaviors aren’t proprietary.Because the eight behaviors are rooted in action, it’s difficult for managers to fake them.Still, Project Oxygen has accomplished what it set out to do: It not only convinced its skeptical audience of Googlers that managers mattered but also identified, described, and institutionalized their most essential behaviors.Oxygen applied the concept of data-driven continuous improvement directly—and successfully—to the soft skills of management.

Widespread adoption has had a significant impact on how employees perceive life at Google—particularly on how they rate the degree of collaboration, the transparency of performance evaluations, and their groups’ commitment to innovation and risk taking.

At a company like Google, where the staff consists almost entirely of “A” players, managers have a complex, demanding role to play.They must go beyond overseeing the day-to-day work and support their employees’ personal needs, development, and career planning.That means providing smart, steady feedback to guide people to greater levels of achievement—but intervening judiciously and with a light touch, since high-performing knowledge workers place a premium on autonomy.It’s a delicate balancing act to keep employees happy and motivated through enthusiastic cheerleading while helping them grow through stretch assignments and carefully modulated feedback.When the process works well, it can yield extraordinary results.

That’s why Prasad Setty wants to keep building on Oxygen’s findings about effective management practice.“We will have to start thinking about what else drives people to go from good to great,” he says.His team has begun analyzing managers’ assessment scores by personality type, looking for patterns.“With Project Oxygen, we didn’t have these endogenous variables available to us,” he adds.“Now we can start to tease them out, using more of an ethnographic approach.

It’s really about observations—staying with people and studying their interactions.We’re not going to have the capacity to follow tons of people, but what we’ll lose in terms of numbers, we’ll gain in a deeper understanding of what managers and their teams experience.” That, in a nutshell, is the principle at the heart of Google’s approach: deploying disciplined data collection and rigorous analysis—the tools of science—to uncover deeper insights into the art and craft of management.A version of this article appeared in the December 2013 issue of Harvard Business Review.