James Lawrence came to General Mills in 1998 with an impressive pedigree. Fresh from the CFO job at Northwest Airlines, he’d once been president of PepsiCola’s Asia, Middle East, and Africa operations, and he co-founded LEK, a corporate-strategy consultancy. For educational credentials, there were the Yale degree in economics and the Harvard MBA with distinction.
That might seem to be a perfect background for the job CEO Steve Sanger asked him to do at the 83-year-old, $7 billion Minneapolis food giant: turn a fragmented 500-person finance department into a cutting-edge shop attracting the best and the brightest. But in Lawrence’s view, there was a danger in relying more on a deep résumé than on old-fashioned street smarts.
“There’s this classic model: Guy comes into organization from the outside. Guy introduces strange, radical ideas. Guy gets fired,” says Lawrence. “Never mind whether the ideas are good or not; he still gets fired.”
How, then, to proceed?
Lawrence’s experience told him that, in light of the organization’s own long-established culture, no prepackaged solution would work. He also believed that it was “better to set a target and let people figure out how to get there, rather than [give] them explicit direction.” So, he let finance staffers themselves identify weaknesses in the department and propose corrections, while also making sure that he recognized and expanded existing best practices. In General Mills’s case, one such gem was its system of rotational assignments for high performers, which was both effective and popular with employees.
The finance department’s weaknesses were clearly documented in a departmental survey in February 1999. It had silolike divisions that isolated finance staffers at the business units, and a spread-out reporting structure that hampered overall operations and muddied career paths at the same time. In addition, employees were spending an average of 50 percent of their time in data gathering rather than analysis. And, says Lawrence, “most people didn’t know where they stood and which areas they needed to work on.”
Two years into the mission, data gathering accounts for less than a quarter of company analysts’ and managers’ time. Turnover among the professional staff has fallen from 11.5 percent to 6 percent, and the company, once a very sporadic presence in the MBA recruiting arena, has snagged 11 grads from top business schools during the past two years. And Lawrence, 48, the winner of the 2001 CFO Excellence Award for Finance Leadership, Development, and Training, has the finance organization primed for what in past years would have been a daunting project: the integration of crosstown rival Pillsbury, whose purchase for $10.5 billion was announced in the summer of 2000.
Reengineering the Finance Department
Lawrence began by searching out seven “change-oriented” people for a new finance steering committee, the Organizational Excellence Group. Charged with proposing solutions to the problems identified in the internal survey, the committee spent 10 to 15 hours a week through the summer of 1999 hashing out issues, polling business unit managers about their needs, and studying best practices at other companies. By that fall, a plan was on Lawrence’s desk.
The plan reorganized finance into three divisions and consolidated transaction processing in a shared-services unit. A permanent, eight-person People & Development Team was established to oversee departmental recruiting, development, and training. The P&D Team also helped install a new finance “co-mentoring program” of minorities and executives which has grown to 23 pairs to encourage the retention of people of color, a traditional sore spot at the corporate home of Betty Crocker, Wheaties, Cheerios, and Gold Medal flour.
Although the package of changes seemed radical to some, Lawrence thought it was sensible and well timed. “People today realize there is no business-as-usual,” he says, adding that “competition is so tough that people know you’ve got to lean into the wind.”
One early P&D Team project was geared toward helping staffers gauge their ability not just to lean, but to lead. In annual reviews, all finance professionals are now rated against a competency model that includes such categories as judgment, candor, and ability to lead change, and they get detailed explanations of what constitutes a “good,” “better,” or “best” rating. The P&D Team also helps to formulate individual plans that are tied to annual reviews, based on personal strengths and goals.
While it standardized evaluation criteria in finance across General Mills’s business units, the team decided against that approach for training. Except for a yearlong financial seminar series that all new hires must take, departments and individuals are encouraged to pursue education that is most relevant to their goals, through cross-division rotations and external classes. The company also offers a few high performers full tuition for an MBA at a top school in exchange for a three-year postdegree commitment.
Employees at a level below the management track came in for plenty of adjustments. Based on reviews of best practices around the industry, a shared-services unit was created by pulling together 65 employees who were previously scattered across headquarters in fragmented accounts payable, expense reporting, and other accounting-based functions. Shared-services teams were designed to be self-directed instead of manager-led. Notes Lawrence: “I had seen how highly motivational the professional teams model could be in consulting work.” But to implement the system, he relied heavily on the good judgment of John Stafford, a 22-year company veteran, who became the unit’s vice president.
Both were concerned that such a shared-services unit could be perceived as the company Cinderella, stuck with the dirty work. So, in addition to removing managerial oversight, Stafford moved the teams to a new facility, let them set their own hours, and encouraged them to work directly with business units. Today, staffers are “accountable, as a team, to govern the process,” says Stafford, whose budget includes $25,000 for awards and “celebrations,” like $25 gift certificates for peer recognition.
The changes especially the loss of some managerial titles and the influx of freshly minted MBAs as rivals for promotion drove about half the original shared-services unit members out the door before the new structure was implemented. Uncertainties about the effects of the Pillsbury acquisition added to the worries. “After working in this company for 24 years, my first thought was, ‘Who’s going to take care of me?’ ” says Pat Mittelstaedt, a longtime manager of expense reporting.
Lawrence took note. In part to protect morale, he instituted a limited, departmentwide hiring freeze through mid-2001, and filled open positions only from within or from among college recruits. Communication efforts that the P&D Team helped organize kept the exodus from developing into a problem. The changes were explained at an all-finance “Shake, Rattle, and Roll” off-site meeting in January 2000, while quarterly meetings and an intranet site kept the employees updated. As a side benefit, says Lawrence, “we were able to accelerate employees’ development and challenge them with new assignments at a faster pace” than before.
Today, departures are much rarer, Stafford says, and 266 résumés flooded in for seven finance slots he recently had to fill. The efforts changed Mittelstaedt’s view, for one. While she gave up some previous responsibilities to team members, she has learned more about technology, and even led training sessions during the reengineering of the expense-report processing system. “I’ve been able to delve into areas that were not my expertise,” she says, calling the experience “scary, but also very rewarding.”
Recipe for Profit
Net and cash keep cooking along at General Mills.
|Sales||$6.03 billion||$6.25 billion||$6.70 billion||$7.08 billion|
|Earnings After Taxes||$537 million||$583 million||$635 million||$665 million|
*Diluted EPS before goodwill, amortization, and unusual items.
Source: General Mills