How to manage global business at Kellogg’s (with focus on people management) H. Shin September 22, 2006 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Introduction Kellogg Company Performance of Kellogg Company (2001 – 2006) Global Alignment Key Operating Principles – Volume to Value Key Operating Principles – Manage for Cash K Values Kellogg’s HR/People Wheel Linking Strategy to Structure & People Linking Talent Management to Business Planning Linking Employee Deliverables to Priorities PMP Form Kellogg Business Leader Kellogg Business Leader Continuous Talent Management Process Introduction Challenges to MNC’s - Aligned Organization - Talent Management Kellogg Company - Founded in 1906 in Battle Creek, Michigan - Started international expansion in 1914 - Products : Cereal, cereal bars, cookies, crackers, toaster pastries, frozen waffles, meat alternatives - Kellogg products are manufactured in 17 countries and marketed in more than 180 countries - 2005 Financials NSV : $10.2 Billion Operating Profit : $1.8 Billion Net earnings : $1.0 Billion Asset : $10.6 Billion Number of Employees : 26,000 Performance of Kellogg Company (2001 – 2006) • Reported NSV growth (5 year CAGR) : • Internal NSV growth (5 year CAGR) : • Operating Profit growth (5 year CAGR) : • Earnings Per Share (CAGR 2002 – 2005) : +11% per year +5% per year +11% per year +11% per year Global Alignment High Performance Organizations are Aligned Purpose To be the Food Company of Choice Identity We build GR-R-REAT brands and make the world a little happier by bringing our best to you. Identity Strategic Focus Strategic Focus • Grow Cereal • Expand Snacks • Pursue Selective External Growth Strategic Operating Principles Strategic • Deliver Results • Strengthen the Organization • Create the Future Values Over Time, Culture Drives Results. Operating Principles Values Key Operating Principles – Volume to Value Expand Gross Profit Margin Grow Net Sales Increase Brand Building Volume to Value Improve Mix Drive Innovation Key Operating Principles – Volume to Value Grow Net Earnings Increase Return on Invested Capital Reduce Working Capital Manage for Cash Improve Financial Flexibility Prioritize Capital Expenditure K Values Kellogg’s HR/People Wheel “To improve business results through people” Create A Winning Culture Reward and Recognize Results Invest In People Select the Right People for the Right Job Creating a Winning Culture Writing Accountabilities Develop Talent Improve Performance Holding Performance Review Discussions (setting accountabilities and reviews) Taking Charge of Your Development Guiding the Development of Your Employees Linking Strategy to structure & People Strategy Structure People Cascade Template Structure Assessment Workforce Assessment Results Linking Kellogg strategy to the department’s strategy is an important process. Structure and people must also be aligned to support WorldClass Execution. Linking Talent Management to Business Planning Jan Goal Setting/ Strategy PMP Career Developmen t Succession Managemen t Feb Mar Apr May Jun July Cascade strategic information Create accountabilities Assess competencies, update EP/IDP 1 1 Aug Sept Oct Nov Dec Business Strategy Planning Discuss comp & previous year perf Review performance to-date Review development to-date. Incorporate SM feedback 2 3 BU/Area Talent Review Global Function Talent Review EMC TR and Org Health Check 3 employee/manager conversations 2 employee assessments Assess and rate performance 2 Linking Employee Deliverables to Kellogg's 2006 Priorities 2001-2003 2004-2006 Perform with the food industry The Kellogg Strategy 2007-2010 Consistently perform with the best of food industry Consistently outperform the best of food industry Kellogg’s Purpose: To become the food stock of choice. 2006 Kellogg Priorities DELIVER RESULTS • Focus on results for the current fiscal year STRENGTHEN THE ORGANIZATION • Focus on supporting work and programs that are just on the “horizon” (beyond the current fiscal year … 12-36 months away) CREATE THE FUTURE • Focus on building an organization unit/company that is ready for the future • Frequently, this is work around building people capability STRENGTHEN THE ORGANIZATION DELIVER RESULTS Deliver on all budget commitments – NSV/CF/OP Grow margins via continuous improvements in price/mix/ innovation, cost reduction and efficiency gains Grow RTEC share Strengthen U.S. Snacks and expand Snacks worldwide CREATE THE FUTURE Continue our focus on Inclusion and Diversity to better reflect our values and the consumers we serve Establish a worldwide talent management process that is robust and complete to help develop our people resources Improve employee health and safety worldwide Develop a stronger innovation pipeline Build a results-driven culture focused on our Values Selectively review acquisitions/ alliances to support our strategy Carefully review selected geographic expansion OU’s Purpose : To become the best operating food company in Asia 2006 Organization Unit Priorities & Imperatives Deliver on all budget commitments : NSV/OP/CF Strengthen talent management process to help develop our people resource Grow margins via continuous improvements in mix, innovation & cost reduction Continue to promote K- Values Accelerate the momentum built in emerging markets such as India & Thailand Develop a stronger innovation pipeline Accelerate growth through developing wholesome snacks business. Focus on Inclusion and Diversity Improve employee health and safety in Asia Grow RTEC share in key markets Strengthen the equity of our core brands Strengthen and develop org to meet the requirement for accelerated growth Establish the business model in China Selectively review acquisitions / alliances to support our strategy OU Department: _________________________________ 2006 Priorities for OU Department: ________ • • • • • • • • • Employee: ___________________________________ 2006 Accountabilities for OU Employee & Metrics • Metrics • • • • • • Metrics Metrics • • • • • • • • • • • PMP Form 2006 Performance Management Form Employee: Manager: 2nd Level Manager: Employee Number: Organization Unit: PMP Assessment: Self Manager Both the employee and manager play a role in completing this form. The PMP process begins when team goals have been set. The employee and manager then agree on accountabilities and measures for the year. At the middle and end of the year, the employee completes a self-assessment. The manager incorporates the self-assessment and stakeholder feedback into the final review of the employee. Signatures are obtained for accountabilities, mid-year review, and year-end review. The manager retains the final, signed form, and submits a copy to the People Services Center (U.S. only). The What: Delivering Results Strengthening the Organization Creating the Future ACCOUNTABILITIES & MEASURES MID-YEAR CHECK IN YEAR-END REVIEW What is the goal/deliverable? How will it be measured? How is this employee tracking so far? What are the employee’s results and impact? People Managers Only: As a manager of people, you are accountable to: *Set 2006 team goals by (Date) *Work with your employees to establish individual accountabilities and IDPs by (Date) *Conduct performance reviews for 2005 by Jan 2006 *Communicate final PMP ratings for 2005 by Mar. 13 *Conduct compensation discussions for 2005 by Mar. 13 *Conduct mid-year check-in and IDP reviews along with post-org review feedback by (Date) *Conduct informal and ongoing coaching and feedback sessions throughout 2006 Diversity Focus (U.S.-based Managers Only): Execute Diversity and Inclusion Strategy and communicate plan, which includes: * Recruit, retain and develop talented people * Drive understanding, education and awareness * Create the environment PMP Form 2006 Performance Management Form The How: K Values Acts with integrity and shows respect Is passionate about our business, our brands, and our food Strives for simplicity Is accountable Has the humility and hunger to learn Loves success Overall Rating MID-YEAR CHECK IN YEAR-END REVIEW How is the employee’s behavior impacting results? What should the employee stop, start, continue, or do differently? In what ways did the employee’s behavior impact results and contribution to the organization? (This section is completed only at year-end. Only the manager determines the rating for the employee.) Exceeded Expectations (A) Met Expectations (B) Did Not Meet Expectations (C) No Rating (NR) Consistently exceeded expectations and made a distinctive and significant contribution to the organization Consistently met and sometimes exceeded expectations and made the expected contribution to the organization Fell short of expectations and/or failed to make the expected contribution to the organization Too new to the organization (i.e., less than three months as a Kellogg employee) at the time ratings were determined Manager’s Summary Comments: Role Confirm Employee’s Response: Initial Date Confirm Initial Date Confirm Employee Accountabilities Mid-Year Review Year-End Review Manager Accountabilities Mid-Year Review Year-End Review 2nd Level Manager Accountabilities N/A N/A Mid-Year Review N/A N/A Year-End Review Initial Date Kellogg Business Leader Creates Direction Has strategic focus, has a broad, long-term perspective, drives innovative thinking, makes the call, learns from experiences Delivers Quarterly Results Budgets, plans, proactively solves problems, identifies and shares opportunities and issues Organizes To Win Ensures that structure and processes can deliver for the overall success of Kellogg, drives for clarity in roles and responsibilities, gets the right people in the right places Drives Alignment Creates a high performance work environment, communicates effectively, influences others, develops relationships, collaborates with others to ensure the overall success of Kellogg Invests in People Sets accountabilities and communicates expectations, provides objective feedback, coaches, measures performance, builds the bench Inspires & Energizes People Encourages, motivates, recognizes & rewards, walks the talk Kellogg Business Leader Career Categories Lead Executive Competency Focus Kellogg Business Leader Model Executive Upper-Manager Manager of People or Process Individual Contributor Functional/ Technical Competencies K Values Continuous Talent Management Process K Values Culture Jan Feb Learn & share company priorities and set employee accountabilities Performance Management Mar Year-end review and compensation discussion Apr May Career Development Succession Management Execution Goal Setting & People Planning Jun Jul Aug Sep Oct Mid-year Check In re: employee’s performance & development Engage in ongoing two-way conversation with employees throughout the year Nov Dec Draft yearend reviews and ratings Thank you!