Ford's Turn

Determined to withstand some of the recessionary hardships its competitors could not, Ford -- helped significantly by its HR leader and team -- transforms itself into a stronger, more unified organization. So far, the turnaround seems to be working.

Wednesday, June 2, 2010
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In July 2007, the Ford Motor Co. proudly announced a second-quarter profit of $750 million -- the iconic American automaker's first quarterly profit since 2005. For the balance of the year and into early 2008, beleaguered Ford had seemingly turned a corner.

When the 107-year-old storied company tallied a $736 million Q1 profit to kick off 2008, the turnaround seemed on track. But what happened next shocked the company (and the country), decimating any immediate hopes for recovery. For Ford and its two domestic competitors, General Motors and Chrysler, the great recession of 2008 was on -- with extreme prejudice. Ford's financial trajectory (and the American auto industry's overall direction) quickly went into a tailspin.

By the time the Times Square ball dropped to mark New Year's 2009, Ford had suffered its worst year ever, racking up a staggering $14.6 billion loss in 2008, with its stock price hitting a rock-bottom $1.01 at year's end.

So much for that Ford turnaround.

As fate would have it, Ford President and CEO Alan Mulally -- who came to the company in late 2006 after architecting a turnaround at Boeing's commercial airplane division -- had already begun making changes that would eventually transform the company . . . the second time in under two years.

Driving it all was Mulally's vision for Ford -- the company's primary operating plan: "ONE Ford: ONE Team, ONE Plan, ONE Goal." It's exactly as it sounds. In a nutshell, Mulally would change Ford into a leaner, more efficient, centralized company -- something it had never truly been.

Apart from several business decisions, including adding new more fuel-efficient models, Mulally's ONE Ford plan focused on people -- employees who had remained after some fairly severe downsizing. (Ford had 213,000 employees in 2008. Today, it has 176,000 employees in 90 global locations).

With a major change-management scenario required to bring his company out of the cavern of near-financial disaster, Mulally would need to lean heavily on Ford's human resource department. So when Ford began its tough climb back from the darkness in early 2008, Felicia Fields, its newly promoted top HR executive, was included on Mulally's top team.

"One of the first things we did was add Felicia to the Ford leadership team," Mulally says. "During this latest turnaround effort, HR has been there every step of the way. It has played, and will continue to play, a pivotal role in enhancing and executing our mission."

Mulally's strategy appears to be working. Ford reported a 2009 net income of $2.7 billion -- the company's first full year of positive net income since 2005 (and a $17.5 billion improvement over 2008). In April, Ford reported an impressive Q1 net income of $2.1 billion, and a pre-tax operating profit of $2 billion (a $4 billion improvement from Q1 2009). Ford also avoided bankruptcy and declined Troubled Asset Relief Program taxpayer-funded bailout money, neither of which General Motors nor Chrysler managed to do.

Change Manager

Fields, 42, a third-generation Ford employee named as group vice president for human resources and corporate services in March 2008 (see All in the Ford Family), hit the ground running. Not only did she need to reconstitute the HR function into a single entity from several siloed HR factions, mimicking Ford's former fragmented corporate state, but she and her team also had to support Mulally's ONE Ford vision as it unfolded, which meant a major focus on communicating that strategy to the remaining Ford workforce.

As a first act, Fields began consolidating the HR function's efforts under what is called the "ONE HR" initiative. She and her team did that in several ways, primarily by standardizing and globalizing as many HR processes as possible, continuing to build on Ford's desire to be a "great place to work," solidifying a capable, effective workforce using "a global, matrixed environment" (mimicking the ONE Ford platform), and finally, achieving labor-cost efficiencies (salary and hourly) to improve Ford's competitive advantage.

"Most of all, we needed to get everyone in sync in delivering the ONE Ford plan," Fields says. "ONE Ford is not just about what we do, but how we do things. Within the Ford HR department, we re-engineered practically everything, creating a smoother glide path for supporting the ONE Ford mission and goals."

Under her leadership, HR quickly developed global priorities and ensured alignment and consistency with people processes, while, at the same time, trying to eliminate the HR silos that existed among the four Ford operating entities (Ford North America, Ford South America, Ford Europe and Ford Asia Pacific Africa) around the world.

As Fields describes it, prior to launching ONE Ford, the company was a "house of brands" (Ford, Lincoln, Mercury, Jaguar, Land Rover, Aston Martin, Volvo) with strong, independent regional business units. As such, key business decisions were largely made by business-unit leaders. Functions such as human resources had a very limited role in business-strategy development, and Ford wasn't organized in a way that would allow it to effectively leverage all of its resources with a total company view.

Fields describes HR as being fragmented, though, she adds, it did already have "deep functional and technical excellence." So, as Ford began to change via ONE Ford, so did Ford's HR organization.

For example, Fields says, similar to what Ford's senior management was doing on the business-strategy front, Fields and her team began holding regular "deep dive" meetings (they continue today) to assess every HR process and plan, looking for opportunities to turn fragmented ones into common ones where it made sense.

From the inception of Mulally's new push, Fields' team's overriding goal has been to support the company by attracting, developing and -- most importantly -- retaining a world-class workforce.

To do that, it had to ensure that all global HR efforts were successful in anticipating business challenges. It also had to provide real-time solutions, using metrics when making critical business decisions.

"We had to implement solutions and hold ourselves accountable to the enterprise, and to each other, for delivering the plan," Fields says.

In short, just as the company moved to more common platforms and processes for the development and manufacturing of its vehicles, Fields and her team created a global "People Cycle Plan" and began re-engineering Ford's people processes.

The People Cycle Plan supports the planning of major Ford processes to boost business objectives and minimize peaks and valleys in HR's workload, she says.

"Ford HR had never done this before, never looked at the human resource function globally," she says. "Our job was to bring it together in support of the ONE Ford plan. The People Cycle Plan helps us do that."

Fields and her team first re-engineered HR's professional-development framework by focusing on staff competencies, effectiveness and goals.

This new push applied to everyone within the HR organization, from entry-level staff all the way to the senior level.

Fields oversaw the creation of new role descriptions for every job, and learning solutions for all development efforts.

"You can't take care of clients in the businesses if you have not taken care of yourself first," she says.

Next came the challenge of closely examining every people process and asking which ones could be standardized across the entire global workforce.

"Every process was filtered through the lens of one team, one force, one HR," says Cyndi Selke, executive director of human resources for the Americas and corporate staffs.

Ford HR began its effort to standardize performance management in late 2008 by forming a global team responsible for designing both a new performance-review form and process, and developing a change-management strategy.

The team conducted regular reviews with process sponsors and global HR leaders and launched a staged rollout of the form and process in late 2008 and early 2009.

Changes to the form included a focus on key objectives (i.e., the People Cycle Plan and a common rating scale for all employees).

Final ratings for all employees are now based on the completion of their objectives, ONE Ford behaviors and performance relative to peers.

In addition, Ford HR developed the global Performance Management Toolkit, which included single-point lessons, video podcasts, job aids and reference materials to support employees as they moved through the many steps of the performance-management process.

Survival Mode

Of course, communication is critical when it comes to workforce reduction, benefit cuts and other negative HR-directed activities during tough times -- negative for those who are let go, those remaining with reduced benefits or salary, and those in HR saddled with delivering the bad news.

Apart from the overall workforce reduction already noted, salaried employment reduction has resulted in a 40 percent trim -- from 35,600 at year-end 2005 to 21,300 at year-end 2009.

"Downsizing is very difficult," Fields says. "But we had to figure out how to move quickly, to protect the skills and help the people remaining at Ford."

Her team accomplished this objective by revising and re-engineering its separation strategy and processes. That meant developing and delivering extensive training to all Ford managers to ensure separations were compassionate, professional and handled with dignity, according to Fields.

The HR team also created two additional "toolkits" to help with the transformation. To protect intellectual property and institutional knowledge, Fields' department developed a Knowledge Transfer Toolkit to facilitate learning between employees who were changing roles within the organization.

More often, though, it was used to transfer knowledge between employees who were leaving and those who were staying.

"The commitment and loyalty of the employees who left us could never be overstated; they cared about Ford and our success," Fields says. "They were willing to do what was necessary to help us build a viable company."

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A Transition Toolkit was also developed to train managers and supervisors on ways to lead during the transition and how to effectively move their teams through the change process, while simultaneously keeping employees focused on the ONE Ford plan.

Fields and the HR team also had to make some tough calls on merit programs and bonuses. Ford gave no merit raises in 2007 or 2009, and no bonuses were paid in 2005, 2008 or 2009. On the benefits front, Ford suspended its 401(k) company match in January 2009 (reinstated in January 2010), and suspended the tuition-assistance program (reinstated in March 2010) and the dependent scholarship program for salaried employees.

"We made sure people understood the importance of cash to the company and the value of their sacrifice," Fields says. "We made a commitment to restore rewards as soon as we could, and we have done that as much as possible."

Selke adds that, no matter what Ford HR was doing or what it took away, it continued to closely monitor -- through surveys -- employee engagement and morale, and workers' thoughts about the company's direction. Following each survey, HR reacted as swiftly as it could to address concerns in order to ensure layoff survivors had the support of counselors and their direct supervisors to move productivelythrough the transition.

"In our employee-engagement surveys, we received thousands of pieces of open-ended feedback, and we needed to understand the morale and what employees were thinking," Selke says.

For example, via the surveys (which the company continues quarterly), Ford employees asked for a clearer understanding of the company's current and future products and technology. Fields and her crew responded by providing several different "Drive One" events that expose employees to Ford products and lets them learn about senior leaders' views on the products and technology.

"With these types of events, employees became greater advocates and were excited about the future and the vehicles they help produce," Selke says.

She adds that the annual "Drive One" events resulted in significant improvements in the "future outlook" dimension of the employee-engagement surveys.

"We carefully read through open comments and continue to refine our process," Fields says.

In particular, she adds, there continues to be a major focus on two items: When Mulally joined the company, employees indicated that they felt top management could do a better job of working together. At that same time, some employees questioned the strength of Ford's product line-up.

Ford's efforts, especially in regard to addressing these two concerns over the past three years, have led to dramatic improvements, Fields says.

Employees now consistently score management alignment very high in surveys (in the mid-to-high-80s percentile), and on whether the company has the right products to move forward (more than 90 percent of employees say it does). As further proof that the zeitgeist is spreading at Ford, the company's surveys find that about 87 percent of employees believe the company is moving in the right direction.

According to Fields, employee communication was a key element in Ford's overall strategic plan, as it wanted to make sure it created a state of awareness and ownership around the turnaround plan.

"Our goal was to build an informed workplace and help to ensure that the leadership team was speaking in a single voice, providing consistent messaging as we moved [forward]," Fields says.

She also notes that the HR team used several communication vehicles, including an @Ford intranet Web site, to communicate major announcements with employees before distributing them externally; a "News to Know" e-mail pushed to all employees summarizing news about Ford on a regular basis; publications such as @ford Magazine and plant newsletters, and global quarterly Town Hall meetings with Mulally that focused primarily on the state of the company.

Despite the heavy workload and emotional challenges, the HR staff has risen to the task every step of the way, say Fields and Selke.

"I cannot tell you how good it feels right now to be at Ford. The energy is palpable," Selke says. "You hear people talking positively about the company. For those of us in HR, the last words I would use are 'burned out.' We're passionate and excited about the future."

At this point, no doubt, Ford's hope is that the car-buying public feels the same way about the Taurus, Edge, Escape and Fusion, some of Ford's key models -- because, despite Ford's progress in making its second comeback in three years, the U.S. auto industry is not yet cruising into recovery.

"These are extraordinarily difficult times, and we don't really know when the crisis will end," Fields says.

"We can never go back to the way things were," she adds. "Alan [Mulally] created One Ford as a way to produce a new company. In [Ford's HR department], we are not taking anything for granted."

Read also:

All in the Ford Family

Leveraging Informal Networks

Turning Around HR

Transforming HR

Qualities of Courageous HR Executives

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