ORGANIZATION PRINCIPLES

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ORGANIZATION PRINCIPLES

• W. Frank Dell II, CMC
• September, 2003

2
AGENDA

• INTRODUCTION
• STRUCTURE
• ROLES RESPONSIBLITIES
• MOTIVATION

3
Objectives

• Introduce elements of organization
• Bridge the theory and reality gap
• Identify common problems and issues

4
Definition

• A body of persons grouped for some end or
  purpose

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History of Organization

• Tribal Chief
• Division of labor
• Warrior
• Hunter
• Support
• Report to Tribal Council
• Birthright Leader

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Element - People

• Employees are the greatest asset of every company
• Types
• Striving to get ahead
• Takes pride in work
• Puts in time
• A great plan without good people is useless

7
Element - Management

• Organizations are built around management
• Management skills
• Inherent
• Learned
• Youre not a manager until you hired and fired
  someone
• A good manager is someone who is right 51 of the
  time
• Traits
• Common sense
• Right and wrong values

8
Element - Culture

• Definition The sum total of ways of living
  built up by a group of human beings and
  transmitted from one generation to another
• Types
• Motherland
• Company

9
Element - Knowledge

• Types
• Education
• Experience
• Education
• Accounting Finance
• Marketing
• Information Technology
• Human Resources
• Distribution

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Factor - Size
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Factor Span of Control
Old 6 to 1
New 11 to 1
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Issue - Silo
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Issue One on One
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People Vs Structure

• Build structure around employees
• Management talent
• Span of Control
• Knowledge

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AGENDA

• INTRODUCTION
• STRUCTURE
• ROLES RESPONSIBLITIES
• MOTIVATION

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Board of Directors

• Senior most advisors
• Maximum independence
• Diverse background and experience

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Managing Director

• Chief Executive Officer
• Strategy execution
• Generalist

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Management Team

• Core requirements
• Merchandising
• Store Operations
• Accounting Finance
• Administration (Human Resources)
• Optional Logistics/Distribution

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Expanded Management Team

• New direct reports
• Human Resources/Personnel
• Information Technology
• Real Estate
• Treasurer (public company)
• General Counsel

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Executive Board

• Board of Directors Overall responsibility
  including strategy
• Executive Board Daily operating responsibility
  including tactics
• Similar to the Management Team approach

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Line Vs Staff

• Line
• Merchandising
• Store Operations
• Logistics

• Staff
• Accounting Finance
• Human Resources
• Information Technology
• Legal
• Loss Prevention
• Real Estate
• Treasury

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Marketing Merchandising

• Marketing the total of activities by which
  transfer of title or possession of goods from
  seller to buyer is effected, including
  advertising, shipping, storing and selling
• Merchandising to plan for and promote the sale

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Marketing

• Competitive assessment
• Customer identification
• Research
• Frequent Shopper program
• Corporate image
• Advertising

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Merchandising Issues

• Number of vendors
• Number of items
• Number of transactions
• Information Technology support
• Promotional strategy
• Warehouse Vs Direct Store Delivery

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Merchandising Models

• Buyer
• Category Manager
• Merchant Prince

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Buyer Organization
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Buyer Time Allocation
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Buyer Alignment
Category
Vendor
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Category Elements

• Manage the category as a strategic business unit
• Develop strategic category plans based on
  category goals, competitors and market conditions
• Determine price, merchandising, promotion and
  product mix
• Collaborate with suppliers

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Category Process
Category Definition
Category Role
Category Assessment
Category Review
Category Scorecard
Category Strategies
Category Tactics
Plan Implementation
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Category Organization
Product Supply
Space Allocation
Marketing Services
Category Management
Retail Merchandising
Price/Data Integrity
Category Analysis
Advertising Coordination
Retail Pricing
Allowance/Cost Control
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Category Management Reality

• Lacking education and training
• Ignoring process
• Selling Category Captain position
• Result is Super Buyer

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Store Operations Issues

• Alignment - format Vs geography
• Training support Vs Human Resources
• Technology - support Vs Information
  Technology

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Store Operations Organization
How many stores per district ?
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Store
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Logistics Issues

• Capital own Vs lease
• Management operate Vs 3rd party
• Replenishment Logistics Vs
  Merchandising
• Production warehouse Vs direct report

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Logistics Organization
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Finance Accounting Issues

• Payroll Finance Vs Human Resources
• Computers Finance Vs direct report
• Control checks and balances

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Finance Accounting Organization
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Human Resources

• Issues
• Payroll
• Training
• Culture

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Real Estate

• Issues
• Own Vs rent
• Remodeling
• Equipment selection

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Loss Prevention

• Issues
• Safety
• Shrink

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Dual Management

• Dotted line reporting
• Effective
• Policy
• Procedures

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AGENDA

• INTRODUCTION
• STRUCTURE
• ROLES RESPONSIBLITIES
• MOTIVATION

45
Board of Directors

• Quarterly meeting
• Responsibilities
• Strategy approval
• Budget approval
• Audit
• Executive compensation
• Treasury
• Shareholder communication

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Management Team / Board

• Monthly meeting
• Responsibilities
• Strategy development
• Budget development
• Daily operations execution

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Department Interact
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Responsibilities

• Merchandising Supplier to shelf
• Distribution Purchase Order to store
• Store Receiving to customer
• Accounting All transactions

49
Associate Communications

• Training Educations (how)
• Directions (what when)
• Technology interface
• Protocol
• Methodology

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Control Components
Budget
Standard Operating Procedure
Goals
Job Description
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Job Description

• Written
• Components
• Minimum requirements
• Reporting relationships
• Specific responsibilities
• Corporate responsibilities
• Updated annually

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Operating Procedures

• Corporate
• Store Operations
• Warehouse Operations
• Transportation Operations
• Merchandising
• Accounting

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Methods - Checkout

• Shift start Sign check cash drawer
• Customer Log into register
• Greet customer
• Scan all items
• Process payment
• Bag items
• Break Lock register
• Shift end Cash drawer to office balance

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Method - Receiving

• Walk from office to receiving area
• Open door and set dock plate
• Count
• Cases per layer
• Layers per pallet
• Record count
• Walk to office and log in delivery

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Budget Management

• Submit a realistic budget
• Category
• Controllable
• Non-controllable / allocations
• Authorization
• Approval levels (amount)
• Positive approvals

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Management Goals

• Set annually
• Review semi-annual
• Driven from company strategy
• Above beyond normal job
• Include some reach goals

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AGENDA

• INTRODUCTION
• STRUCTURE
• ROLES RESPONSIBLITIES
• MOTIVATION

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Management is the Role Model
Walk the walk
Talk the Talk
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Not Pay Alone
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Reinforcement

• Positive
• Recommended
• Long term

• Negative
• Use sparingly
• Short term

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Lessons for Leaders

• Timing is (almost) everything
• Anything is possible if you share the glory
• Trust, once broken, is seldom restored
• Leadership is about building connections
• Leaders learn from their mistakes

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Lessons for Leaders (Cont.)

• Confidence not just in oneself counts
• Effective partnership requires devotion to ones
  partners
• Renewal comes from many sources
• Leaders must be talent brokers

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• Thank You

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• W. Frank Dell II, CMC
• President
• DELLMART Company
• 125 Hardesty Road
• Stamford, CT 06903 USA
• Tel [phone]
• Fax [phone]
• e-mail Wfdell2_at_msn.com