Group 3 Mayra Garcia Lindsey Pacatte David Hayward Garrett Matthews Nick Watkins Cory Logan

 Strategy is best carried out when everyone is on board with it  Everyone, from top management down to front line employees, need to understand why they are implementing change  Implementation can be hindered if people do not understand why things are being changed

 Employees must understand why changes are being made  Build execution into strategy from the start  Reach for fair process in policy implementation of new strategies

Lubber liquid coolants example – choosing right coolant is a delicate process – strategy to eliminate complexity & costs – sales process was dramatically simplified

 Strategic move was doomed from the start ◦ sales reps saw the shift as a direct threat ◦ felt their contributions went unappreciated ◦ worked against the expert system ◦ deal with management risk up front

 What is Fair Process? ◦ Means Procedural Justice or the fairness of the steps or processes taken to resolve a dispute or allocate resources  How does this Procedural Justice affect business? ◦ People who believe what they are doing is right will be more effective and efficient

 In essence Fair Process is management’s expression of procedural justice  We see that when Fair Process is implemented in the strategy-making process, the employees can believe that upper management is trustworthy

Fair Process Trust and Commitment Voluntary Cooperation Exceeds Expectations Strategy Formulation Process Attitudes Behavior Strategy Execution

 1 st Principle  Engagement  Involving individuals in the strategic decisions  Communicates respect for Individuals  Sharpens everyone’s thinking  Results in better strategic decisions

 2 nd Principle  Explanation  Understand why final strategic decisions are made  Allows employees to trust manager’s intentions  Powerful feedback loop

 3 rd Principle  Expectation Clarity  State clearly the new rules of the game  To achieve fair process matters most about clarity  Must to taken together lead to judgment of fair process.

 Elevator Systems Manufacturer ◦ Elco’s Chester and High Park plant ◦ 1980s, sales in the elevator industry had declined ◦ Office space lead to a vacancy rate of 20%

 Solution ◦ Create and execute a blue ocean strategy ◦ Offer buyers a leap in value while lowering cost ◦ Replace its batch-manufacturing system with a cellular approach

 The Process ◦ Install system at the Elco’s Chester plan first  Had decertified their own unions  Ideal work force for the change  Expected a positive spillover effect on High Park

 The results ◦ Elco’s Chester Plant  Change led to disorder and rebellion  Cost and quality were in free fall  Wanted to unionize ◦ High Park  Accepted the strategic shift  Felt they were treated fairly  Willingly participated in the execution

 A closer look- Elco managers violated all 3 principles of fair process ◦ Failed to engage employees in the decision ◦ Manager was always absent ◦ Managers didn’t explain why the decision was made ◦ Managers also neglected to make clear what was expected under the new process

 Elco’s Chester ◦ Process undermined employees’ trust ◦ Only saw negative side ◦ Fights erupted ◦ Employee’s rejected the transformation  High Park ◦ Introduced consultants to employees ◦ Held plant-wide meetings ◦ Calmed employees from the thought of layoffs

 Why does fair process matter?  Why is fair process important in shaping people’s attitudes and behavior?  Why does the observance or violation of fair process in strategy making have the power to make or break a strategy’s execution?

Violation of Fair Process Intellectual & Emotional Indignation Distrust & Resentment Refusal to Execute Strategy Fair Process Intellectual & Emotional Recognition Trust & Commitment Voluntary Cooperation in Strategy Execution The Execution Consequences of the Presence and Absence of Fair Process in Strategy Making

 Intellectual and Emotional Recognition  Trust and Commitment  Voluntary Cooperation in Strategy Execution

 Intellectual and Emotional Indignation  Distrust and Resentment  Refusal to Execute Strategy

 Commitment, trust, and voluntary cooperation are not merely attitudes or behaviors; they are intangible capital  Trust brings heightened confidence in one another’s intentions and actions  Commitment enables people to override personal self-interest in the interest of the company

 Commitment, trust, and voluntary cooperation allow companies to stand apart in the speed, quality, and consistency of their execution and to implement strategic shifts fast at low cost  The question raised by management is how to create trust, voluntary cooperation, and commitment deep within the organization