3M's Organizational Culture
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Case Details:
Case Code : HROB022
Case Length : 14 Pages
Period : 2001 - 2002
Pub Date : 2003
Teaching Note : Available
Organization : 3M
Industry : Mining and Manufacturing
Countries : USA
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts Contd...
Rewarding Innovation
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In addition to recruiting innovative people, creating a challenging environment
for employees, and encouraging a culture of knowledge sharing, 3M also focused
on rewarding employees.
To encourage the spirit of innovation among employees 3M realized it was
necessary to reward them appropriately. The dual ladder career path adopted by
3M, created two career ladders - technical and management.
This approach allowed even a technical person to get promoted to the
vice-president level without taking on managerial and administrative
responsibilities...
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Culture Overhaul
By the late 1990s, 3M's growth rate started slowing down. According to
reports, the stock price of 3M dropped from $83.00 in 1996 to $71.13 in 1998
and the price-earning ratio (P/E ratio) of the company also declined
considerably (Refer Table III).
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It was reported that during 1995-2000, earnings per
share grew at an average of only 8.8% and shareholder returns fell
far behind Dow and the S&P 500. Analysts felt that 3M was unable to
respond to market conditions. Commenting on 3M's performance during
the decade, Bob Burgstahler (Burgstahler), chief of Business
development, said, "We have not produced elite results that
correspond to the view that this is an elite organization." In
December 2000, 3M announced the appointment of James McNerney Jr. (McNerney)
of General Electric as its CEO. For the first time, an outsider was
appointed as CEO of 3M. The stock markets responded positively to
the appointment of McNerney and 3M's stock price closed at $120.50,
the highest in the decade... |
Exhibits
Exhibit I: Breakthrough Innovations at 3M
Exhibit II: Income Statements of 3M
Exhibit III: Mechanisms Stimulating Innovation at 3M
Exhibit IV: Rewards & Recognitions at 3M
Exhibit V: Initiatives Launched by Mcnerney
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