Kimberly-Clark and the New Performance Culture, Part 1

This is an article about the new “performance culture” being instituted in industry to create a greater turnover in employment (which is intended to be beneficial to both employees and management alike) and introduce higher productivity. Specifically, it is about an older traditional manufacturing company, Kimberly-Clark, producers of such everyday commodities as Scott Paper Towels and Kleenex, and how they and their employees have adapted to the new efficiency. If this sounds like a latter-day version of what used to be called “Taylorism,” it could very well be, though perhaps more kindly. Whether it is equally successful among the workers as it is with management, we will let you be the judges.

 The original article, from which this was extracted, appeared in the August 22 Wall Street Journal and was written by Lauren Weber.  Because of its length we will publish it in two parts.

BN-PL948_PERFCU_P_20160818183701

Making paper for Scott paper towels at the company’s 
Chester, Pa. mill in 1917. PHOTO: KIMBERLY-CLARK

For generations, having a job at Kimberly-Clark meant having a job for life. The maker of household products such as Huggies and Kleenex paid its employees above-market salaries and avoided layoffs. Even low performers rarely felt pressure. “A lot of people could and would hide in the weeds,” said Rick Herbert, a sales director who retired in 2014 after more than three decades with Kimberly-Clark.

That’s over. One of the company’s goals now is “managing out dead wood,” aided by performance-management software that helps track and evaluate salaried workers’ progress and quickly expose laggards. Turnover is now about twice as high it was a decade ago, with approximately 10% of U.S. employees leaving annually, voluntarily or not, the company said.

Armed with personalized goals for employees and large quantities of data, Kimberly-Clark said it expects employees to keep improving—or else. “People can’t duck and hide in the same way they could in the past,” said Mr. Boston, who oversees talent management globally for the firm. It has been a steep climb for a company that once resisted conflict and fostered a paternalistic culture that inspired devotion from its workers.

The last recession led many employers to rethink the nearly automatic merit raises they had been doling out, forcing them to do a better job identifying high and low performers when giving raises and bonuses. Millennial workers, meanwhile, demand more feedback, more coaching and a stronger sense of their career path.

Companies spend $14 billion a year on products to help manage employees, including human-resources software from Workday Inc., SAP SE ’s SuccessFactors and Cornerstone onDemand Inc., with about $2 billion of that dedicated to performance management, according to human-resources advisers Bersin by Deloitte. Those systems let managers track workers’ progress via dashboards that display their goals, accomplishments, attendance, peer feedback and other data.

Executives’ use of phrases like “performance culture” in conference calls with analysts and investors has doubled in the past five years, according to a review of transcripts in the Factiva news database. Firms that set goals and hold workers accountable “clearly outperform,” said Nicholas Bloom, an economist at Stanford University and co-author of a recent paper that used Census data to examine more than 32,000 U.S. manufacturing plants. He said they have faster growth, higher profitability and are less likely to go bankrupt.

In 2008, with the company’s shares stagnant, few innovations in the pipeline and a belief that costs were bloated, the CEO added human-resources executives to the team putting together the firm’s long-term business plan for the first time.

Holding workers close through good times and bad is “not sustainable” any more, said Liz Gottung, the company’s human-resources chief. “If you look at when we started implementing the big pieces of the company’s people strategy, when you map that to our stock price and our business results, you can see the clear correlation.” Shares closed at a high of $138.13 in April, and its quarterly dividend, which it has raised every year for more than four decades, hit a high of 92 cents a share in February. The share price has more than doubled since 2008.

Not long ago, when Kimberly-Clark Corp. employees gathered for interdepartmental meetings, they prefaced their comments with their names and years of service at the company. These days, “no one cares,” said Scott Boston, vice president of human resources. The attitude in meetings is “ ‘let’s get moving,’ ” he said.

For generations, having a job at Kimberly-Clark meant having a job for life. The maker of household products such as Huggies and Kleenex paid its employees above-market salaries and avoided layoffs. Even low performers rarely felt pressure. “A lot of people could and would hide in the weeds,” said Rick Herbert, a sales director who retired in 2014 after more than three decades with Kimberly-Clark.

That’s over. One of the company’s goals now is “managing out dead wood,” aided by performance-management software that helps track and evaluate salaried workers’ progress and quickly expose laggards. Turnover is now about twice as high it was a decade ago, with approximately 10% of U.S. employees leaving annually, voluntarily or not, the company said.

To be continued

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