Dell Aims To Put Fire Back into Corporate Culture
By Robert Weisman
November 11, 2003
After the stock bubble burst in 2000, top executives at computer maker Dell Inc. faced a dilemma that all high-flying technology companies were struggling with: how to keep employees motivated and focused on the long run when business was slowing and the prospects of short-term wealth had evaporated.
"We needed to enrich the corporate culture so people wanted to stay at Dell for much more than just the stock price," recalled Kevin B. Rollins, 50, the Dell president and chief operating officer.
Tinkering with corporate culture is no simple matter, especially at a company that had thrived by focusing relentlessly on business processes and driving down costs. Dell's management was known for being direct and demanding, and for executing on its plans. So the trick was to fire up the rank and file without diluting those winning attributes.
Rollins and his boss, founder and chairman Michael S. Dell, have taken a number of steps to challenge employees and smooth the rough edges of Dell management. They commissioned "Tell Dell" employee surveys seeking feedback on managers, including themselves. They issued a pamphlet, "The Soul of Dell," setting forth the company's guiding principles. They launched a General Electric-style Six Sigma quality review of manufacturing and marketing practices aimed at slashing waste. And, last year, they announced a bold goal -- doubling Dell's annual sales to $60 billion by 2006.
Most recently, Dell launched a strategic initiative called "Winning Culture," and new measurements for rewarding managers who behave in ways that embody the Dell culture. That covers everything from improving processes to developing employees to promoting work force diversity. Management bonuses are based on boosting scores each year.
As to the feedback from subordinates, "what most people said is they wanted to be developed," reported Rollins, who was a consultant at Bain & Co. in Boston from 1984 to 1997, before he moved to Dell in Austin, Texas. "They wanted to grow and develop as managers, and they wanted to join a company that cared enough about them to do that." Companies everywhere are grappling with similar issues. After the shocks that have marked the past few years -- recession, war, terror, business fraud -- managers and employees seem to be looking for goals more meaningful than the trinity of growth, profit, and shareholder value that sufficed in the go-go days.
"I'm definitely seeing an increase in companies trying to figure out their culture, how to create it and define it and use it internally," observed Virginia writer and speaker Mary E. Foley, a former manager of corporate training for America Online Inc. who created its "cultural infrastructure" in the late 1990s. "What's happening is that employees are saying, 'What do I really want out of this company?' Salary and stock options are no longer the big drivers."
Foley said the goal at AOL, whose payroll expanded tenfold to 10,000 employees during her tenure, was to make employees feel personally connected to an "adrenaline-inspiring" mission. "People need to see a connection between their individual roles and the larger mission," she said. "That's what makes people want to get up and go to work in the morning. And that's not related to stock price."
Dell has never been about pioneering a new technology, as AOL helped do in its early days. Rather, Dell has been a pioneer in a new business model, direct-to-consumer sales, and in running a highly efficient global production and distribution system. So setting the $60 billion revenue target in a slow-crawl economy was Dell's way to make the adrenaline run and get people up in the morning -- and, not so incidentally, to link cost-cutting to the notion of a winning culture.
To meet its goal, Dell will have to extend its low-cost manufacturing expertise from PCs and servers to new markets such as printers, consumer electronics, and data storage. Its two-year-old alliance with EMC Corp. of Hopkinton, under which Dell builds midrange EMC storage gear in Texas, is one component of that push.
"Cost reduction is part of our DNA," said Rollins. "Can we do it less expensively? Can we lower price? Can we expand the market? That is part of our winning culture."