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Every manager is familiar with the employee who just won't change. Sometimes it's easy to see why--the employee fears a shift in power or the need to learn new skills. Other times, such resistance is far more puzzling. An employee has the skills and smarts to make a change with ease and is genuinely enthusiastic--yet, inexplicably, does nothing. What's going on? In this article, two organizational psychologists present a surprising conclusion. Resistance to change does not necessarily reflect opposition, nor is it merely a result of inertia. Instead, even as they hold a sincere commitment to change, many people unwittingly apply productive energy toward a hidden competing commitment. The resulting internal conflict stalls the effort in what looks like resistance but is in fact a kind of personal immunity to change. An employee who's dragging his feet on a project, for example, may have an unrecognized competing commitment to avoid the even tougher assignment--one he fears he can't handle--that might follow if he delivers too successfully on the task at hand. Without an understanding of competing commitments, attempts to change employee behavior are virtually futile. The authors outline a process for helping employees uncover their competing commitments, identify and challenge the underlying assumptions driving these commitments, and begin to change their behavior so that, ultimately, they can accomplish their goals.

It's bad enough to lose a trusted employee who works well within your organization, but when you lose a star performer who has built up strong customer relationships, something else is at stake: The star's customers may also walk out the door. In a two-year study of more than 200 people from 57 companies, Neeli Bendapudi and Robert Leone found that most strategies to keep customers when stars leave are largely ineffective because they grow out of a company's perspective, not a customer's. The authors asked customers how they felt and discovered three main concerns. First, customers can become attached to a particular key contact employee, and if that person leaves, they wonder whether service will suffer. You can forge a broader relationship by ensuring that customers interact with many employees, using techniques like deploying teams, rotating staff, and offering one-stop shopping. Second, customers fear that a replacement won't be as good as the employee who left. You can combat this by stressing the quality of all your employees--not just superstars. Publicize your hiring practices, training, and employees' achievements. Third, customers want information about the changeover and how you will manage the transition. Communicate the identity of a replacement in advance of a departure, and have the outgoing employee introduce the new person. Addressing all areas of customer concern in concert tells customers that you value their business and that you deserve to keep it. In the article, the authors also include a scorecard to rate your company on how well you are protecting customer relationships when employee turnover occurs.

When you think of UPS, what comes to mind? Most likely, you conjure up images of brown delivery vans, but this $30 billion company is much more than a package delivery carrier. Since its founding in 1907, UPS has continually broadened its territory, its offerings, and its mission to better serve a changing marketplace. Today, it employs over 360,000 people and operates in some 200 countries and territories. In this interview, CEO Jim Kelly--who began his UPS career 37 years ago as a driver--talks candidly about the challenges of trying to grow such a huge, mature business. He explains the company's focus on international expansion: "Going forward, the rest of the world offers more growth opportunity than the United States because we have a long way to go to achieve the same density abroad that we have domestically." And he discusses how UPS chooses which new business streams to pursue. To move forward, Kelly says, UPS has had to recast its mission: UPS enables global commerce not just by delivering packages but by facilitating the worldwide flow of information and funds as well. His biggest problem, he admits, has been giving UPS employees the confidence to take on all that new territory. He talks about how he helped foster a new self-image as a company of innovators, undaunted by an uncertain world. Once UPSers reflected on the many changes the company had undergone--from a local messenger service to a common-carrier wholesale business to an airline offering next-day deliveries to a logistics management and finance business--they developed, as Kelly puts it, a sense of, "Yeah, it's new and it's different...but that's okay. We've done that successfully for many years."

Marriott International for many years had a deeply ingrained culture of face time--if you weren't working long hours, you weren't earning your pay. That philosophy didn't seem totally off base in an industry that provides 24/7 service, 365 days a year. But it had a price: By the mid-1990s, Marriott was finding it tough to recruit talented people, and some of its best managers were leaving, often because they wanted to spend more time with their families. "Our emphasis on face time had to go," recalls Bill Munck, a Marriott vice president for the New England region. In this article, Munck describes how Marriott transformed its "see and be seen" culture by implementing an initiative dubbed Management Flexibility at several of its hotels. This six-month pilot program was designed to help managers strike a better balance between their work lives and their home lives--all while maintaining Marriott's high-quality customer service and its bottom-line financial results. Munck explains how he and his leadership team took the first, relatively easy, step of eliminating redundant meetings and inefficient procedures that kept managers at the office late. The tougher task, he says, was overhauling the fundamental way managers thought about work. Under the pilot, Marriott's message to employees was: Put in long hours when it's needed, but take off early if the work is done--and don't be shy about doing so. As a result of the program, managers are working five fewer hours per week with no drop-off in customer service levels; they report less stress and burnout; and they perceive a definite change in the culture, with less attention paid to hours worked and a greater emphasis placed on tasks accomplished.

Retailing is and always has been an inefficient business. Retailers, particularly those that operate large chains, have to predict the desires of fickle consumers, buy and allocate complex sets of merchandise, set the right prices, and offer the right promotions for each individual item. Inevitably, there are gaps between supply and demand, leaving stores holding too much of what customers don't want and too little of what they do. Now, however, a new set of software tools promises to revolutionize the entire merchandising chain. These merchandising optimization systems, as they're called, determine the right quantity, allocation, and price of items to maximize retailers' returns. By applying sophisticated data processing techniques to existing inventory and sales data, they accurately model future patterns of supply and demand at the item and store level. In other words, they turn the art of merchandising into a science. Early users of the new software, such as Gymboree and J.C. Penney, are already reporting promising gains in gross margins in the range of 5% to 10%. Retailers are also seeing significant increases in efficiency: At one chain, for instance, planners' productivity rose 20%. Equally important, retailers are showing improvements in customer satisfaction, as shoppers become more likely to find desired merchandise in stock at fair prices. This article provides retailers with a guide to merchandising optimization systems, explaining how they work and how they change processes at each step of the merchandising chain.

Jill Hoover was looking skyward, marveling at the heart-stopping beauty of Paradise Park-Seattle's newest attraction, its tallest and scariest roller coaster to date: the Anaconda. "Quite impressive," Jill thought. But a scuffle in the ride queue quickly brought the CEO of Paradise Parks back to earth. The company's 19 seasonal and year-round amusement parks had always been popular--ever since Jill's father founded the original Paradise Park just after the Second World War--but they hadn't been very profitable of late. Operating costs had been spiraling, and every dollar of extra revenue had been hard won. At the company's annual management off-site meeting, held that morning at the Seattle park, CFO Nathan Cortland proposed that Paradise offer its customers the option of a "preferred guest" card. Cardholders would pay more, but they would get first crack at the rides--entering through separate lines--and would get seated immediately at any of the parks' restaurants. According to Nathan, the plan would bolster Paradise's sagging finances because it would target the "mass affluents"--a rising demographic of moneyed but time-pressed people who might visit the park more often and spend more if it weren't for long lines at the rides. Jill respects Nathan's idea--but hasn't her plan to upgrade some of the parks' souvenir shops to gift boutiques already shown some promise? And doesn't Nathan's plan smack of elitism, as Jill's longtime friend and park manager Adam Goodwin suggests? The CEO has resolved to get back to Nathan with a decision about "Operation Upmarket" by the time she leaves Seattle and returns to headquarters. Should Paradise Parks offer guests different levels of service? In R0110A and R0110Z, John Harrington, Edward Goldman, Alexander Labak, Robert Crandall, offer their advice on this fictional case study.

Jill Hoover was looking skyward, marveling at the heart-stopping beauty of Paradise Park-Seattle's newest attraction, its tallest and scariest roller coaster to date: the Anaconda. "Quite impressive," Jill thought. But a scuffle in the ride queue quickly brought the CEO of Paradise Parks back to earth. The company's 19 seasonal and year-round amusement parks had always been popular--ever since Jill's father founded the original Paradise Park just after the Second World War--but they hadn't been very profitable of late. Operating costs had been spiraling, and every dollar of extra revenue had been hard won. At the company's annual management off-site meeting, held that morning at the Seattle park, CFO Nathan Cortland proposed that Paradise offer its customers the option of a "preferred guest" card. Cardholders would pay more, but they would get first crack at the rides--entering through separate lines--and would get seated immediately at any of the parks' restaurants. According to Nathan, the plan would bolster Paradise's sagging finances because it would target the "mass affluents"--a rising demographic of moneyed but time-pressed people who might visit the park more often and spend more if it weren't for long lines at the rides. Jill respects Nathan's idea--but hasn't her plan to upgrade some of the parks' souvenir shops to gift boutiques already shown some promise? And doesn't Nathan's plan smack of elitism, as Jill's longtime friend and park manager Adam Goodwin suggests? The CEO has resolved to get back to Nathan with a decision about "Operation Upmarket" by the time she leaves Seattle and returns to headquarters. Should Paradise Parks offer guests different levels of service? In R0110A and R0110Z, John Harrington, Edward Goldman, Alexander Labak, and Robert Crandall offer their advice on this fictional case study.

Reveals the interesting and unusual story behind Ford's selection of "Edsel" as the new brand name for its ill-fated 1957 new product launch. Noteworthy as perhaps the most extensive, creative, and politically charged naming stories on record. Although both nontraditional approaches to name generation (i.e., correspondence with a popular poet of the time) and more traditional research tools (e.g., consumer surveys exploring top-of-mind brand-name associations and opposites, advertising agency brainstorming) provide input to the naming decision, this is all put aside by the company's chairman of the board, who makes a unilateral decision to use "Edsel" in the final hour. This name choice goes against both consumer research, which suggests problems with the name, and the beliefs of Edsel's sons, who feel that their father may not want his name so utilized, thus revealing the aesthetic quality of the naming decision.

This case presents a capital budgeting problem. Whirlpool Europe is evaluating an investment in an enterprise resource planning (ERP) system that would reorganize the information flow throughout the company. Students derive the cash flows from working capital, sales, and other improvements along with the cost of the investment.

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BigEast is considering adopting a relationship-centric view in its credit card approval process. This would shift the bank's current practice of analyzing applications based on the merits of a single product to one where the customer's existing relationship is considered in the approval process.

Corporate health costs are again shooting up at double-digit rates. Employers need to take responsibility for that cost increase and redesign the structure of their health benefits.

Armed with their important-sounding titles, all the "chiefs" in a company naturally want to report directly to the CEO. But that's not always feasible--or wise. A chart illustrates a more reasonable reporting structure.

After a decade of economic weakness, the doors of Japan Inc. are opening for outsiders. In fact, research shows that foreign acquirers now have considerable advantages over domestic acquirers. Here's how companies can seize those advantages.

Harvard Business School professor William Sahlman comments on his 1999 HBR article, "The New Economy Is Stronger Than You Think." Despite the market crash, he says, the new economy continues to hold its value.

The (A) case describes the situation of Cadbury Schweppes (CS) and its sugar confectionery business, in a state of 'satisfactory underperformance' in which past strategies and practices make it hard for new management to initiate change in this widely respected company. The (B) case shows how from 1997 to 1999 John Sunderland, the new CEO and a new divisional manager used value based management (VBM) as a vehicle for transforming respectively the company and the sugar confectionery division with strong emphasis on people and leadership practices. The (C) case describes how CS' performance management system was redesigned in line with the Managing for Value (MfV) philosophy. It illustrates the new management performance process in action in the beverages business in Spain, where the country manager is faced with major competitive challenges.

The (A) case describes the situation of Cadbury Schweppes (CS) and its sugar confectionery business, in a state of 'satisfactory underperformance' in which past strategies and practices make it hard for new management to initiate change in this widely respected company. The (B) case shows how from 1997 to 1999 John Sunderland, the new CEO and a new divisional manager used value based management (VBM) as a vehicle for transforming respectively the company and the sugar confectionery division with strong emphasis on people and leadership practices. The (C) case describes how CS' performance management system was redesigned in line with the Managing for Value (MfV) philosophy. It illustrates the new management performance process in action in the beverages business in Spain, where the country manager is faced with major competitive challenges.

Corporate budgeting is a joke, and everyone knows it. It consumes a huge amount of executives' time, forcing them into endless rounds of dull meetings and tense negotiations. It encourages line managers to lie and cheat, lowballing targets and inflating results. And it turns business decisions into elaborate exercises in gaming. The sad thing is, budget shenanigans have become so embedded in corporate life that they're accepted as business as usual--no matter how destructive they are. The source of the problem is using budget targets to drive managers' compensation. In a traditional pay-for-performance compensation program, a manager earns a hurdle bonus when performance reaches a certain level. The bonus increases with performance until it hits a maximum cap. These "kinks" in the pay-for-performance line create incentives to game the system. When performance approaches the hurdle target, a manager will try to accelerate the realization of revenue and profit. When performance hits the cap, the manager has a strong incentive to push revenue and profit into the next year. To eliminate inducements to game the system, companies should adopt a purely linear pay-for-performance scheme that rewards actual performance, independent of budget targets. A manager receives the same bonus for a given level of performance whether the budget goal happens to be set beneath that level or above it. Severing the link between budgets and bonuses eliminates managers' motivation to lowball targets, and it takes away incentives to move revenues and expenses around when the end of a budget period approaches. Not only does this remove the costs of gaming, it also frees managers from all the time they traditionally had to devote to it.

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