Lee Iacocca started at Ford in 1946 in the engineering department. He quickly moved into sales and started his ascent up the organization. He is known as the father of the Ford Mustang and other vehicles. His success catapulted him into the President’s seat in 1970. His popularity within Ford started a power shift and rift between himself and Henry Ford II. Iacocca was fired in 1978, which was a shock to many given his accomplishments. He took over as CEO of Chrysler which was on the brink of bankruptcy and turned the company around. Lee Iacocca was a master at motivating and managing the large organization (100,000+ employees), and I found this excerpt in his autobiography to be very useful:
One of my first ideas came from Wall Street. The Ford Motor Company had finally gone public only four years earlier, in 1956. Now we were owned by a large group of stockholders, who were keenly interested in our health and productivity. Like other publicly held corporations, we sent those stockholders a detailed financial report every three months. Four times a year the kept tabs on us through these quarterly reports, and four times a year we paid them a dividend out of our earnings.
If our stockholders had a quarterly review system, why shouldn’t our executives? I asked myself. I began to develop the management system I still use today. Over the years, I’ve regularly asked my key people – and I’ve had them ask their key people, and so on down the line – a few basic questions:
What are your objectives for the next ninety days?
What are your plans, your priorities, your hopes?
How do you intend to go about achieving them?
On the surface, this procedure may seem like little more than a tough-minded way to make employees accountable to their boss. It is that, of course, but it’s also much more, because the quarterly review system makes employees accountable to themselves. Not only does if force each manager to consider his own goals, but it’s also an effective way to remind people not to lose sight of their dreams.
Every three months, each manager sits down with his immediate superior to review the manager’s past accomplishments and to chart his goals for the next term. Once there is agreement on these goals, the manager puts them in writing and the supervisor signs off on it. As I’d learned from McNamara, the discipline of writing something down is the first step toward making it happen. In conversation, you can get away with all kinds of vagueness and nonsense, often without even realizing it. But there’s something about putting your thoughts on paper that forces you to get down to specifics. That way, it’s harder to deceive yourself – or anybody else.
The quarterly review system sounds almost too simple – except that it works. And it works for several reasons:
It allows a man to be his own boss and to set is own goals.
It makes him more productive and gets him motivated on his own.
It helps new ideas bubble to the top.
The quarterly review forces managers to pause and consider what they’ve accomplished, what they expect to accomplish next, and how they intend to go about it. I’ve never found a better way to stimulate fresh approaches to problem solving.
Another advantage of the quarterly review system – especially in a big company – is that it keeps people from getting buried. It’s very hard to get lost in the system if you’re reviewed every quarter by your superior and, indirectly, by his boss and his boss’s boss. This way, good guys don’t’ get passed over. And equally important, bad guys don’t get to hide.
Finally, and this is perhaps the most important of all, the quarterly review system forces a dialogue between a manager and his boss. In an ideal world, you wouldn’t need to institute a special structure just to make sure that kind of interaction takes place. But if a manager and his boss don’t get along very well, at least four times a year they still have to sit down to decide what they’re going to accomplish together in the months ahead. There’s no way they can avoid this meeting, and over time, as they gradually come to know each other better, their working relationship usually improves.
Source: IACOCCA: An Autobiography of Lee Iacocca, Chapter 5: The Key To Management