organization principles w. frank dell ii, cmc september, 2003

ORGANIZATION PRINCIPLESORGANIZATION PRINCIPLES

W. Frank Dell II, CMC

September, 2003

DELLMART & COMPANY 2

AGENDAAGENDA

INTRODUCTIONSTRUCTURE

ROLES & RESPONSIBLITIES

MOTIVATION


ObjectivesObjectivesIntroduce elements of organizationBridge the theory and reality gapIdentify common problems and issues


DefinitionDefinition

“A body of persons grouped for some end or purpose”


History of OrganizationHistory of OrganizationTribal Chief

– Division of labor• Warrior• Hunter• Support

– Report to Tribal CouncilBirthright Leader

King

Earl/General Earl/General Earl/General

Advisors


Element - PeopleElement - PeopleEmployees are the greatest asset of

every companyTypes

– Striving to get ahead– Takes pride in work– Puts in time

A great plan without good people is useless


Element - ManagementElement - ManagementOrganizations are built around managementManagement skills

– Inherent– Learned

You’re 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


Element - CultureElement - CultureDefinition – “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


Element - KnowledgeElement - KnowledgeTypes

– Education– Experience

Education– Accounting & Finance– Marketing– Information Technology– Human Resources– Distribution


Factor - SizeFactor - Size

0

5

10

15

20

25

30

35

Small Medium Large

General

Medium

Special


Factor – Span of ControlFactor – Span of Control

1 2 3 4 5 6

1 2 3 4 5 6 7 8 9 10 11

Old – 6 to 1

New – 11 to 1


Issue - SiloIssue - Silo


Issue – One on OneIssue – One on One

Boss

Boss

Worker Worker Worker


People Vs StructurePeople Vs StructureBuild structure

around employees– Management talent– Span of Control– Knowledge


AGENDAAGENDA

INTRODUCTION

STRUCTUREROLES & RESPONSIBLITIES

MOTIVATION


Board of DirectorsBoard of DirectorsSenior most advisorsMaximum independenceDiverse background and experience

Board of Directors


Managing DirectorManaging DirectorChief Executive OfficerStrategy executionGeneralist

Board of Directors

Managing Director


Management TeamManagement Team

Core requirements– Merchandising– Store Operations– Accounting & Finance– Administration (Human Resources)

Optional – Logistics/Distribution

ManagingDirector

MerchandisingStore

OperationsLogistics

Accounting &Finance

Administration


Expanded Management Expanded Management TeamTeam

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

ManagingDirector

MerchandisingStore

Operations

LogisticsAccounting &

Finance

HumanResources

InformationTechnology

RealEstate

Treasurer

LegalLoss

Prevention


Executive BoardExecutive Board

Board of Directors – Overall responsibility including strategy

Executive Board – Daily operating responsibility including tactics– Similar to the Management Team approach

Board ofDirectors

ExecutiveBoard


Line Vs StaffLine Vs StaffLineMerchandisingStore OperationsLogistics

StaffAccounting & FinanceHuman ResourcesInformation TechnologyLegalLoss PreventionReal EstateTreasury


Marketing & Marketing & MerchandisingMerchandisingMarketing – “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”


MarketingMarketingCompetitive assessmentCustomer identification

– Research– Frequent Shopper program

Corporate image– Advertising


Merchandising IssuesMerchandising IssuesNumber of vendorsNumber of itemsNumber of transactionsInformation Technology supportPromotional strategyWarehouse Vs Direct Store Delivery


Merchandising ModelsMerchandising ModelsBuyerCategory ManagerMerchant Prince


Buyer OrganizationBuyer Organization

VP Merchandising

Buyer Buyer Buyer Administration

Retail Pricing AdvertisingSpace


Buyer Time AllocationBuyer Time AllocationStore Visit,

20%

New Products,

10%

Promotion, 15%

Data, 15%

Replenish, 40%


Buyer AlignmentBuyer Alignment

VendorCategory


Category ElementsCategory ElementsManage the category as a strategic

business unitDevelop strategic category plans based

on category goals, competitors and market conditions

Determine price, merchandising, promotion and product mix

Collaborate with suppliers


Category ProcessCategory Process

Category Definition

Category Role

Category Assessment

Category Scorecard

Category Strategies

Category Tactics

Plan Implementation

Cat

egor

y R

evie

w


Category OrganizationCategory Organization

Product Supply

Space Allocation

Retail Merchandising

Category Analysis

Retail Pricing

Advertising Coordination

Price/Data Integrity

Marketing Services

Allowance/Cost Control

CategoryManagement


Category Management Category Management RealityRealityLacking education and

trainingIgnoring processSelling Category Captain

positionResult is Super Buyer


Store Operations IssuesStore Operations IssuesAlignment - format Vs geographyTraining – support Vs Human

ResourcesTechnology - support Vs Information

Technology


Store Operations Store Operations OrganizationOrganization

Vice President

District District District Support

Store

Store

Store

Store

Store

Store

Store

Store

Store

Meat

Product

Bakery

Labor

ReplenishmentHow many stores per district ?


StoreStore

Manager

Front End Meat Produce Bakery GroceryBackOffice


Logistics IssuesLogistics IssuesCapital – own Vs leaseManagement – operate Vs 3rd partyReplenishment – Logistics Vs

MerchandisingProduction – warehouse Vs direct

report


Logistics OrganizationLogistics OrganizationVice

President

Transportation Warehouse Maintenance

Inbound

Outbound

Receiving

Selection

Shipping

InventoryControl

ReplenishmentIndustrial

Engineering

Production


Finance & Accounting Finance & Accounting IssuesIssuesPayroll – Finance Vs Human ResourcesComputers – Finance Vs direct reportControl – checks and balances


Finance & Accounting Finance & Accounting OrganizationOrganization

Vice President

Controller PayrollInternalAudit

Budget

AccountsPayable

GeneralLedger

InformationTechnology Tax


Human ResourcesHuman ResourcesIssues

– Payroll– Training– Culture

Vice President

Recruitment Payroll Training Compliance

Headquarters

Stores

Logistics


Real EstateReal EstateIssues

– Own Vs rent– Remodeling– Equipment selection

Vice President

Site SelectionContract

ManagementConstruction Maintenance


Loss PreventionLoss PreventionIssues

– Safety– Shrink

Vice President

Stores Warehouse Headquarters Safety


Dual ManagementDual ManagementDotted line reportingEffective

– Policy– Procedures


AGENDAAGENDA

INTRODUCTION

STRUCTURE

ROLES & RESPONSIBLITIESMOTIVATION


Board of DirectorsBoard of DirectorsQuarterly meetingResponsibilities

– Strategy approval– Budget approval– Audit– Executive compensation– Treasury– Shareholder communication


Management Team / Management Team / BoardBoardMonthly meetingResponsibilities

– Strategy development– Budget development– Daily operations & execution


Department InteractDepartment Interact

Merchandising

Logistics

Headquarters

Stores


ResponsibilitiesResponsibilitiesMerchandising – Supplier to shelfDistribution – Purchase Order to storeStore – Receiving to customerAccounting – All transactions


Associate Associate CommunicationsCommunicationsTraining & Educations (how)Directions (what & when)Technology interface

– Protocol– Methodology


Control ComponentsControl Components

StandardOperatingProcedure

Budget

JobDescription

Goals


Job DescriptionJob DescriptionWrittenComponents

– Minimum requirements– Reporting relationships– Specific responsibilities– Corporate responsibilities

Updated annually


Operating ProceduresOperating ProceduresCorporateStore OperationsWarehouse OperationsTransportation OperationsMerchandisingAccounting


Methods - CheckoutMethods - CheckoutShift start – Sign & check cash drawerCustomer – Log into register

– Greet customer– Scan all items– Process payment– Bag items

Break – Lock registerShift end – Cash drawer to office &

balance


Method - ReceivingMethod - ReceivingWalk from office to receiving areaOpen door and set dock plateCount

– Cases per layer– Layers per pallet– Record count

Walk to office and log in delivery


Budget ManagementBudget ManagementSubmit a realistic budgetCategory

– Controllable– Non-controllable / allocations

Authorization– Approval levels (amount)– Positive approvals


Management GoalsManagement GoalsSet annually

– Review semi-annual

Driven from company strategyAbove & beyond normal jobInclude some reach goals


AGENDAAGENDA

INTRODUCTION

STRUCTURE

ROLES & RESPONSIBLITIES

MOTIVATION


Management is the Role Management is the Role ModelModel

Walk the walk Talk the Talk


Not Pay AloneNot Pay Alone

Title

Perks

Benefits

Pay


ReinforcementReinforcement

PositiveRecommendedLong term

NegativeUse sparinglyShort term


Lessons for LeadersLessons for LeadersTiming is (almost) everythingAnything is possible if you share the

gloryTrust, once broken, is seldom restoredLeadership is about building

connectionsLeaders learn from their mistakes


Lessons for Leaders Lessons for Leaders (Cont.)(Cont.)Confidence – not just in oneself countsEffective partnership requires devotion

to one’s partnersRenewal comes from many sourcesLeaders must be talent brokers


W. Frank Dell II, CMCPresident

DELLMART & Company125 Hardesty Road

Stamford, CT 06903 USA

Tel: 203-968-8609Fax: 203-968-8613

e-mail: [email protected]

organization principles w. frank dell ii, cmc september, 2003

Documents

someonea good manager

operating responsibility

total of activities

good people

sum total of ways

timea great plan

group of human beings

strategyexecutive board