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Some of the best ideas about performance appraisal are coming from the public sector. Government agencies are setting up systems that really can tell the weak from the strong.

By March 2000's first quarter evaluation, it was evident that EUROCAP Equities Japan had performed beyond expectations. Its primary year-2000 objective was to become the top-choice broker for its client for Japanese equities. However, when bonuses were handed out in March for 1999's performance, two key research analysts threatened to resign and the team was overall dispirited, as bonuses were lower than expected and lower than industry payouts. Key issues facing EUROCAP Equities Japan management included: How would key employees' expectations be managed in 2000? How was EUROCAP Equities Japan going to retain its employees in a bull-run with competitive pressures on the small local resource pool? How would employees be motivated through compensation packages, and what other methods would be used to make employees excel in their performance and thrust EUROCAP Equities Japan's performance into the limelight?

This case looks at entrepreneurial leadership and business development on several levels. It addresses issues that typically arise in new ventures and bricks to clicks transformation, including: evolution from the messy start-up stage to a more professional organization; entrepreneurship and internal incubators; strategies for continued growth and diversification; and brand management and marketing. It also looks closely at entrepreneurship in the very complex political and economic environment in Russia, and analyses the way past history and culture influence the course of an entrepreneurial organization's development insights which can be applied to organizations in other Eastern European countries. Finally, the case is a chronicle of a founder-entrepreneur¿s hopes, fears and impressions, an intimate look at the birth and growth of an entrepreneurial organization.

The department manager at Consumer Material Enterprises, Inc. wants to improve employee satisfaction in his department and starts with his own immediate subordinates. Satisfied that earlier production problems are under control, he wants to create an atmosphere of "one big, happy family." However, a visit from a summer intern reveals more tension among his staff than the department manager had realized, and he wonders how to proceed. This case emphasizes data that reflect differences in perceptions, attitudes, and assumptions between new supervisors with college degrees and old-timers who are high school graduates.

Open competition for other companies' people, once a rarity in business, is now an accepted fact. Fast-moving markets require fast-moving organizations that are continually refreshed with new talent. But no one likes to see talent leave; when a good employee walks, the business takes a hit. It's futile to hope that by tinkering with compensation, career paths, and training efforts, you can wall off your company from today's labor market. But there is an alternative: a market-driven approach to retention based on the assumption that long-term, across-the-board loyalty is neither possible nor desirable. By taking a hard look at which employees you need to retain and for how long, you can use highly targeted programs to keep the required talent in place. Most companies today rely on compensation to build loyalty, but compensation is only one of many useful retention mechanisms. You can redesign jobs to reduce turnover: UPS kept many more drivers by shifting the tedious job of loading trucks to other employees. You can promote loyalty to particular projects or to work teams. You can hire people who aren't in high demand and place valuable employees in locations where they won't be constantly tempted by job offers. You can team up with other companies to offer cross-company career paths. And when there's no effective way to prevent attrition, you can learn to live with it: outsource, strengthen recruitment, standardize jobs, cross-train employees, and organize work around short-term projects. If managing retention in the past was akin to tending a dam, today it is more like managing a river. The object is not to stop water from flowing but to control its direction and speed.

Although women have made enormous gains in the business world--they hold seats on corporate boards and run major companies--they still comprise only 10% of senior managers in Fortune 500 companies. What will it take to shatter the glass ceiling? According to Debra Meyerson and Joyce Fletcher, it's not a revolution but a strategy of small wins--a series of incremental changes aimed at the subtle discriminatory forces that still reside in organizations. It used to be easy to spot gender discrimination in the corporate world, but today overt displays are rare. Instead, discrimination against women lingers in common work practices and cultural norms that appear unbiased. Consider how managers have tried to rout gender discrimination in the past. Some tried to assimilate women into the workplace by teaching them to act like men. Others accommodated women through special policies and benefits. Still others celebrated women's differences by giving them tasks for which they are "well suited." But each of those approaches proffers solutions for the symptoms, not the sources, of gender inequity. Gender bias, the authors say, will be undone only by a persistent campaign of incremental changes that discover and destroy the deeply embedded roots of discrimination. Because each organization is unique, its expressions of gender inequity are, too. Drawing on examples from companies that have used the small-wins approach, the authors advise readers on how they can make small wins at their own organizations. They explain why small wins will be driven by men and women together, because both will ultimately benefit from a world where gender is irrelevant to the way work is designed and distributed.

Alice in Wonderland (A) showed how the new Managing Director of LVV transformed a trucking company from a "fossilized" and "arthritic" minor subsidiary of a Dutch shipping group into a revitalized organization. The case looks at how her own leadership characteristics, as well as Dutch leadership styles, contributed to the development of an authentizotic culture of trust, affiliation, and meaning for employees, and how the financial situation of the company was turned around as a result. Alice in Wonderland (B) case follows Marike van Lier Lels as she takes on the position of COO of Schiphol Airport. Despite her brilliant previous career successes, her tenure there ends acrimoniously. This case series explores leadership in different contexts, and highlights the management of disappointment. NOTE: Alice in Wonderland (A) was a disguised case, but at the time of writing the (B) case, Marike van Lier Lels gave permission to use her real name.

SUPERVALU examines the creation and implementation of a training program for attracting and retaining college graduates for the nation's largest wholesale food distribution company. It addresses: 1) program design and 2) the management of the design effort and program implementation. The case is appropriate for courses in organizational behavior, human resources management, and general management.

Many companies have succeeded in reengineering their core processes, combining related activities from different departments and cutting out ones that don't add value. Few, though, have aligned their organizations with their processes. The result is a form of cognitive dissonance as the new, integrated processes pull people in one direction and the old, fragmented management structures pull them in another. That's not the way it has to be. In recent years, forward-thinking companies like IBM, Texas Instruments, and Duke Power have begun to make the leap from process redesign to process management. They've appointed some of their best managers to be process owners, giving them real authority over work and budgets. They've shifted the focus of their measurement and compensation systems from unit goals to process goals. They've changed the way they assign and train employees, emphasizing whole processes rather than narrow tasks. They've thought carefully about the strategic trade-offs between adopting uniform processes and allowing different units to do things their own way. And they've made subtle but fundamental cultural changes, stressing teamwork and customers over turf and hierarchy. These companies are emerging from all those changes as true process enterprises--businesses whose management structures are in harmony, rather than at war, with their core processes. And their organizations are becoming much more flexible, adaptive, and responsive as a result.

In a 30-year career, a recently retired international manager of Xerox Corp. played a major role in the company's international expansion to emerging economies, assumed key responsibilities for the negotiation and founding of several international joint ventures, and served as an expatriate manager of these ventures in several countries (e.g., Mexico, Brazil, and China). The case presents issues surrounding these developments in the context of doing business in emerging economies.

The board of directors of Medtronic, Inc., a company known for its commitment to effective corporate governance, must prepare for the departure of Chairman and CEO Bill George and the retirement of four long-time directors. The company had experienced rapid growth in the early 1990's as well as significant change in the composition of its board. Now the Medtronic directors must evaluate how the board has changed, how it will continue to change, and how it should prepare for the future.

This case examines the organizational changes and human resource strategies implemented to create an entrepreneurial culture within the formerly state-owned oil company. After a local entrepreneur radically downsized and reorganized the company, YPF was successfully taken public in 1993. But in a country where the economy had been closed for many decades and state-owned institutions had become bloated and highly bureaucratic, changing the mindset and behavior of the workforce to turn it into a competitive player in the world economy was not automatic. It required major redesign of organizational systems, like recruiting, training, and performance management. The case describes the changes introduced by a new vice president of human resources and offers early reaction to those changes.

Hiring good people is tough, but keeping them can be even tougher. The professionals streaming out of today's MBA programs are so well educated and achievement oriented that they could do well in virtually any job. But will they stay? According to noted career experts Timothy Butler and James Waldroop, only if their jobs fit their deeply embedded life interests--that is, their long-held, emotionally driven passions. Butler and Waldroop identify the eight different life interests of people drawn to business careers and introduce the concept of job sculpting, the art of matching people to jobs that resonate with the activities that make them truly happy. Managers don't need special training to job sculpt, but they do need to listen more carefully when employees describe what they like and dislike about their jobs. Once managers and employees have discussed deeply embedded life interests--ideally, during employee performance reviews--they can work together to customize future work assignments. In some cases, that may mean simply adding another assignment to existing responsibilities. In other cases, it may require moving that employee to a new position altogether. Skills can be stretched in many directions, but if they are not going in the right direction--one that is congruent with deeply embedded life interests--employees are at risk of becoming dissatisfied and uncommitted. And in an economy where a company's most important asset is the knowledge, energy, and loyalty of its people, that's a large risk to take.

Case A: The authors believe that knowledge management is a convergence of at least three factors: an appreciation of knowledge issues, the availability of sophisticated IT technology, and the managerial competence to suitably craft jobs and culture. This case takes the reader through the experiences of Booz-Allen & Hamilton in crafting their knowledge system and dealing with these factors.

Hiring executives has always been a daunting task--and today's economy makes it tougher than ever. The global scope and breakneck pace of business, the shrinking supply of job candidates, and the constant shift of organizational structures have increased the stakes exponentially; one wrong hire can quickly derail a company. Yet recent studies indicate that between 30% and 50% of executive-level hires end in firings or resignations. What makes hiring go wrong so often? And how can executives substantially improve the outcome of the process? This article provides some surprising answers to those questions. Fernandez-Araoz presents ten common hiring traps and many real-world examples of how those traps have scuttled business plans in a variety of industries worldwide. A large consumer goods company, for instance, slipped into the delegation gaffe trap when it handed over the screening and interviewing process to a mismatched team of managers that had an agenda different from the CEO's. And the ignoring emotional intelligence trap tripped up a U.S. telecommunications company that hired a CEO with a great track record--only to fire him less than a year later when his lack of cross-cultural social skills was discovered. Hiring well is a strategy--perhaps an organization's most important one, the author says. To sidestep the hiring traps, he suggests ways to systematically assess the company's needs and to determine how those needs mesh with the open job description--before candidates walk through the door. Fernandez-Araoz's search strategy incites managers with hiring responsibilities to be creative, determined, and courageous when embarking on a candidate search.

For many organizations, achieving competitive advantage means eliciting superior performance from employees on the front line--the burger flippers, hotel room cleaners, and baggage handlers whose work has an enormous effect on customers. That's no easy task. Frontline workers are paid low wages, have scant hope of advancement, and--not surprisingly--often care little about the company's performance. But then how do some companies succeed in engaging the emotional energy of rank-and-file workers? A team of researchers at McKinsey & Company and the Conference Board recently explored that question and discovered that one highly effective route is demonstrated by the U.S. Marine Corps. The Marines' approach to motivation follows the "mission, values, and pride" path, which researchers say is practical and relevant for the business world. More specifically, the authors say the Marines follow five practices: they overinvest in cultivating core value; prepare every person to lead, including frontline supervisors; learn when to create teams and when to create single-leader work groups; attend to all employees, not just the top half; and encourage self-discipline as a way of building pride. The authors admit there are critical differences between the Marines and most businesses. But using vivid examples from companies such as KFC and Marriott International, the authors illustrate how the Marines' approach can be translated for corporate use. Sometimes, the authors maintain, minor changes in a company's standard operating procedure can have a powerful effect on frontline pride and can result in substantial payoffs in company performance.

Gerald Weiss left Wall Street for the promise of a CFO position at a well-established corporation. He was given a 10-year options package with a guaranteed floor of $12 million and unlimited upside. To ensure the entire package would be worth at least $12 million after 10 years, Gerald negotiated a special provision, which gave him the ability to "gross-up" his options twice over those ten years. If the stock price fell substantially, Gerald would be awarded more options (at-the-money) to bring the entire Black-Scholes value of his package back up to $12 million. Because of the company's culture of informality, the deal was agreed to with a handshake from the CEO, witnessed by the current CFO and the VP of human resources, but not written down. When the stock price actually fell, and Gerald asked to revalue his options package, the company reneged on the deal. Teaching Objective: To generate discussion about the benefits and pitfalls of mega-option grants, the issue of revaluing options, and the conflict between adhering to company culture and protecting the financial interests of the employee.

As the stock market began its ascent in the mid-1990s, executive pay--always the subject of heated debate--mounted along with it. That's because among the largest U.S. companies, stock options now account for more than half of total CEO compensation and about 30% of senior operating managers' pay. One problem became particularly clear during the bull market's astonishing run: even below-average performers reap huge gains from stock options when the market is rising rapidly. The author proposes steps to close the gap between existing compensation practices and those needed to promote higher levels of achievement at all levels of the corporation. For top managers, he recommends replacing conventional stock options with options that are tied to a market or peer index. Below-average performers would not be rewarded under such plans; superior performers could, depending on the way plans were structured, receive even more. He notes that managers at the business unit level should not be judged on the company's stock price--over which they have little control--and advocates an approach that accurately measures the value added by each unit. Finally, he suggests how certain indicators of value can be used to measure the contribution of frontline managers and employees. The concept of pay for performance has gained wide acceptance, but the link between incentive pay and superior performance is still too weak. Reforms must be adopted at all levels of the organization. Shareholders will applaud changes in pay schemes that motivate companies to deliver more value.

What happens when the world is changing but your organization isn't? And what if that organization has 340,000 employees in 200 countries? In this interview, Jacques Nasser, the new CEO of Ford Motor Company, talks with HBR senior editor Suzy Wetlaufer about these challenges and explains how his company is overcoming them through a unique education program. Since its very beginnings, says Nasser, Ford has comprised dozens of far-flung divisions and units, each with its own "fiefdom" mind-set. The fiefdoms didn't share information, let alone great ideas. Such behavior stifled creativity and drove up costs. Today's global environment demands a new and different way of doing business, says Nasser, and to that end, Ford has launched a multifaceted teaching initiative that will reach every one of Ford's employees by year-end. The goal of the program: to help employees view the company in its entirety as shareholders do, and then act that way, too. At the heart of the initiative is the teachable point of view, a five-part written explanation of what a person knows and believes about what it takes to succeed in business. It is more than just a document to be discussed and then filed. It has proven to be a powerful tool for organizational transformation, and not only at Ford. In a commentary accompanying Nasser's interview, Noel Tichy, leadership expert and consultant to Ford, describes the building blocks of the teachable point of view and explores how it can be implemented in any organization determined to change for the better.

This case illustrates Mitsubishi Motors Manufacturing of America's (MMMA) responses to allegations of sexual harassment in 1996 at its Normal, Illinois, facility. The majority of the case focuses on major events that took place between 1992 and spring 1996, culminating in an Equal Employment Opportunity Commission (EEOC) investigation and class-action suit, which at the time was estimated to be the most expensive suit ever filed. The decision-maker in the case is Lynn Martin, former U. S. Secretary of Labor, who had been hired by Mitsubishi to help the organization take corrective action. Exhibits include a brief history on sexual harassment law and a description of the EEOC. This case works well with MBA and executive audiences to address how to restore credibility and reputation following a scandal. It also highlights the challenges that an outside consultant faces when hired to make policy recommendations aimed at image restoration.