"America's Most Admired Companies"

Ann Harrington

Fortune

March 8, 2004, pp. 80-111

Each year, Fortune magazine gives it rankings of America's most admired companies, based on ratings made by 10,000 executives, directors, and securities analysts. This year's top ten were:

1. Wal-Mart
2. Berkshire Hathaway
3. Southwest Airlines
4. General Electric
5. Dell Computer
6. Microsoft
7. Johnson & Johnson
8. Starbucks
9. FedEx
10. IBM

Though there are some small differences in the order of the top ten from last year, the only "newcomer" to the list is IBM (which actually is returning after a 17-year absence).

Ratings were also made for companies in the respondents' own industries on social responsibility, innovation, long-term investment value, use of corporate assets, employee talent, financial soundness, quality of products/services, and quality of management. The high scorers on these criteria were:

• Social Responsibility—United Parcel Service, Alcoa, Washington Mutual
• Innovation—Washington Mutual, Starbucks, Procter & Gamble
• Long-term Investment Value—Exxon Mobil, United Parcel Service, Berkshire Hathaway
• Use of Corporate Assets—United Parcel Service, Procter & Gamble, Berkshire Hathaway
• Employee Talent—Procter & Gamble, American Express, Walgreen
• Financial Soundness—United Parcel Service, Microsoft, Anheuser-Busch
• Quality of Products/Services—Anheuser-Busch, United Parcel Service, Procter & Gamble
• Quality of Management—United Parcel Service, Liz Claiborne, Procter & Gamble

The top ten admired companies outside the US were:

1. Toyota Motor
2. BMW
3. Sony
4. Nokia
5. Nestlé
6. Honda Motor
7. BP
8. Singapore Airlines
9. Canon
10. L'Oréal

The article also provides lists of rankings for 64 different industries.

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"Ties That Bind"

David Drickhamer

Industry Week

January 2004, pp. 49-58

This article reports the results of a value chain study conducted for Industry Week. Surveys were mailed out to 25,000 individuals, and there were 1,461 completed questionnaires returned. This is an overall response rate of 5.9%, so the results must be interpreted with caution. However, the article provides some useful benchmark data, as it provides results for the sample median and the top quartile of respondents on a number of variables:

• Cash-to-cash cycle time—median 56 days; top quartile 30 days.
• Total inventory turn rate—median 6.0; top quartile 10.0.
• Production schedule attainment—median 80 %; top quartile 87%.
• Cost of quality (as percent of annual revenues)—median 0.7 %; top quartile 0.1 %.
• Percentage of sales from products launched previous year—median 15%; top quartile 25%.
• Time to market—median 150 days; top quartile 60 days.
• Products launched on budget—median 75%; top quartile 90%.
• Products launched on time—median 60%; top quartile 86%.
• Percent R&D cost for new products—median 25%; top quartile 50%.
• Supplier lead time—median 14 days top quartile 7 days.
• On-time delivery—median 90%; top quartile 95%.
• Percentage of purchases from certified vendors—median 75%; top quartile 90%.
• Percentage of total sales orders that require no manual intervention—median 0%; top quartile 30%.
• Percentage of annual orders not fulfilled due to stockouts—median 2%; top quartile 0%.
• Customer retention rate over last 3 years—median 80%; top quartile 86%.
• Customer order-to-delivery time—median 7 days; top quartile 3 days.
• Supplier delivery dock-to-stock cycle time—median 4 hours; top quartile 2 hours.
• Customer order pick-to-ship cycle time—median 4 hours; top quartile 2 hours.
• Order fill rate—median 97.7%; top quartile 99%.
• Total logistics cost as a percentage of sales—median 4.3%; top quartile 2.0%.

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"Six Sigma... at a Bank?"

Milton Jones

ASQ Six Sigma Forum Magazine

February 2004, pp. 13-17

In 2001, the top executives of Bank of America decided that their company "needed a more rigorous, disciplined and comprehensive approach to process improvement and decided to adopt a quality program based on Six Sigma." The CEO and the rest of the company's top ten officers were required to lead Six sigma projects. At the same time, senior Six Sigma professionals were recruited from companies such as General Electric, Honeywell, and Motorola. The hoshin kanri planning process was also adopted.

More than three dozen Six Sigma projects concentrated on ATM system failures. As a result, overall defects across electronic channels were reduced by 88%.

Though the first Six Sigma projects focused on traditional operations-oriented applications, such as reducing errors and late entries, Bank of America quickly expanded outside of operational areas to customer issues, improving sales processes, reducing fraud, and even opening new facilities. The Six Sigma process became embedded in the culture of Bank of America. For the past two years, key vendors have been required to use Six Sigma methods, and now they are also required to participate in the Bank of America's own Six Sigma training programs.

Among the successful results so far are a 36% improvement in same day payments and a 47% improvement in deposit processing. Measures of "customer delight" have increased by 25%. Taken as a whole, it is estimated that the use of Six Sigma and other quality tools has created benefits of more than $2 billion since 2001.

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"The 2004 Training Top 100"

Tammy Galvin

Training

March 2004, pp. 22-71

This article provides some excellent data for companies wishing to benchmark their training efforts against what Training magazine considers to be the top training departments in U.S. companies:

• The average "Top 100" company spends 4.1% of its payroll on training. The average of the Top 5 companies is 11% (Pfizer leads with 14%)
• The average "Top 100" company has 54 annual training hours per employee. The average of the Top 5 companies is 168 hours (Ritz-Carlton leads with 274 hours)
• The average "Top 100" company has a ratio of full-time training pros to employees of 1:263. The average Top 10 ratio is 1:62 (KLA-Tencore leads with 1:48)
• The average "Top 100" company spends $5.3 million annually on tuition. The average Top 10 company spends $26.4 million (Verizon communications leads at $100 million)
• The average "Top 100" company has 7.5% of its employees using tuition reimbursement plans; The average Top 10 company has 18.9% (Booz Allen Hamilton leads at 28%)
• Out of the Top 100 companies, here are the percentages that have the following training programs (companies listed are the benchmark companies):
  • Leadership Development—98% (BMO Financial Group)
  • First-Line Supervisor Development—95% (Pacific Northwest National Laboratory)
  • Mentoring—87% (Blue Cross and Blue Shield of North Carolina)
  • Career Counseling—79% (Verizon Wireless)
  • Executive Coaching—84% (Wachovia)
  • Succession Planning—88% (Prudential Financial)
  • Job Rotation—72% (Intel)
  • Job Shadowing—68% (Avnet Technology Solutions)

The overall ranking of the top 50 on the list is:

1. IBM
2. Pfizer
3. Sprint
4. Booz Allen Hamilton
5. KLA-Tencor
6. Deloitte & Touche
7. AT&T
8. Ernst & Young
9. Lockheed Martin
10. Ritz-Carlton Hotel Co.
11. Edward Jones
12. Capital One Financial Corp.
13. Bank One
14. Wyeth Pharmaceuticals
15. Ohio Savings Bank
16. BMO Financial Group
17. Intel
18. AmeriCredit Corp.
19. Northwest Airlines
20. Verizon Wireless
21. A.G. Edwards & Sons
22. QUALCOMM
23. Cendant
24. Roche Diagnostics
25. Paychex Inc.
26. Johnson Controls
27. Wachovia Corp.
28. Pacific Northwest National Laboratory
29. First Data Corp.
30. Blue Cross and Blue Shield of North Carolina
31. Prudential Financial Inc.
32. The Reynolds and Reynolds Co.
33. Science Application Intl. Corp.
34. BB&T Corp.
35. Wells Fargo
36. Marriott International
37. Special People in Northeast Inc.
38. LexisNexis
39. Bausch & Lomb
40. BMW Group Financial Services
41. IKEA
42. AFLAC
43. Cingular Wireless
44. Avnet Technology Solutions
45. Applied Materials
46. The Vanguard Group
47. Allstate Corp.
48. Gilbane Building Corp.
49. Household International
50. DAU

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"Getting Engaged"

Steve Bates

HR Magazine

February 2004, pp. 44-51

Employee engagement has become a hot topic. Research indicates that, for a typical organization, roughly 50% of all employees do just enough to get by, 25% are totally turned off by their jobs, and only 25% are enthusiastic.

Consulting firm Towers Perrin says the following workplace attributes are most critical to employee engagement (in order of importance):

1. Senior management is interested in employees' well-being
2. Challenging work
3. Decision-making authority
4. Evidence that the company is focused on customers
5. Career advancement opportunities
6. The company's reputation as a good employer
7. A collaborative work environment where people function well in teams
8. Resources to get the job done
9. Input on decision making
10. A clear vision from senior management about success

The article provides case studies in employee engagement from New Century Mortgage, Saks Fifth Avenue, Roche Diagnostics Corp., Stryker Corp., and Toyota Motor Manufacturing.

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Hoshin Kanri and Its Cousins

John McNeil, GP Deltapoint

The Jones article refers to Bank of America's adoption of the Hoshin Kanri planning process. What's the big deal? Hoshin Kanri is often called Policy Deployment and it's the method used to translate the implementation goals of Six Sigma projects into action plans throughout an organization. Policy Deployment in turn can be considered the application of Deming's Plan Do Check Act cycle to the management process.

GP Deltapoint puts it this way...

Improving performance through waste reduction and following reliable methods to assure consistency are both essential components of world-class performance.

The best areas to focus on improvement are chronic, important issues. In other words, improvement projects should be carried out to improve key performance indicators (KPIs) that have lagged consistently. Some of those projects can be completed simply using standard analytical tools or our Situation, Target Proposal method. Others need more in-depth study by a team; that is where the Quality Improvement Story or Global 8D might be best. More intractable issues may need the analytical rigor of Six Sigma's designed experiments. In any case, measurable improvement is the result.

The best areas to focus reliable methods are those that can help keep key KPIs on track. Reliable methods are consciously developed, consistently followed and currently believed to be the best practice. They must have an identified owner to maintain the method as a standard. Many organizations link these efforts to ISO certification. In any case, sustaining of improvements is the result.

So the big deal is that Six Sigma without Hoshin Kanri would result in sporadic localized successes. Those successes would likely be most implementable by the Six Sigma cadre of black belts and might not translate well across locations and time. The big deal is that the $2 billion prize would be a lot smaller had BoA not been holding a full house of improvement cards.

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