General Mills Incorporated, Minneapolis Minnesota

Editors note: This is a paper I wrote for a business class at Augsburg College. The assignment was to choose a company listed within Fortune magazines “Top 100 best places to work for in 2015”, provide an overview of the company and why you would choose to work there.

General_Mills-512x384General Mills Incorporated is a Fortune 500 corporation headquartered in Golden Valley, Minnesota. General Mills was formed in 1928 under the direction of Washburn-Crosby President, James Ford Bell, merging 26 other flour mills. In 2001, General Mills merged with its arch rival, Pillsbury, one of the original flour milling companies from the 1860’s and 70’s.

Continue reading General Mills Incorporated, Minneapolis Minnesota

Six Sigma, Just in Time Production and Lean Manufacturing Thinking


Six Sigma; reduce defects, errors to leverage opportunities

Six Sigma is a Total Quality Management technique and a registered trademark of Motorola Incorporated, where a defect is defined as any process output that does not meet customer specifications, or could lead to creating an output that does not meet customer specifications. According to (What is Six Sigma?, 2013) “the fundamental objective of the Six Sigma methodology is the implementation of a measurement-based strategy that focuses on process improvement and variation reduction through the application of Six Sigma improvement projects.” Six Sigma comes from the Greek letter sigma which means to statistically measure how far something deviates from perfection, and is a quality standard that specifies there can be no more than 3.4 defects per million “opportunities”. An opportunity is defined as “a chance for non-conformance, or not meeting the required specifications”. (Six Sigma, 2009)

Six Sigma is also “a generic term for a quality-control approach that takes nothing for granted and emphasizes a disciplined and relentless pursuit of higher quality and lower costs” (Goding, 2001) and has been championed at such companies as General Electric and DuPont.

Within the Six Sigma program are three levels of experience and training represented by “Green Belt”, “Black Belt” and the highest, the “Master Black Belt”. A Six Sigma Green Belt is acquired by receiving training and demonstrating a basic understanding of Six Sigma. A Black Belt requires a full-time job of leading a team implementing Six Sigma, and a Master Black Belt is one who will “champion the exercise throughout the organisation and to watch over the Black Belts and ensure that they are consistently improving the quality of their team’s output” (Six Sigma, 2009)

On the surface, manufacturers most easily apply Six Sigma, but service organizations can also utilize its principles. The company moves “up the sigma ladder” gradually achieving two, three and four sigma before six, by reducing defects. Computer programs are fed the goals (the specifications of a perfect product or process) of achieving six sigma and perform the necessary calculations. Changes are continually made to the machines and processes until six sigma is achieved, which is roughly 3.4 defects per million parts. When comparing a 99% reduction in defects to a Six Sigma reduction, the following examples can be used. Instead of 7.2 hours per month without electricity, there is only 9 seconds. Instead of 800,000 mishandled personal checks each day, there are only 3.

Six Sigma is designed to reduce defects through statistical and mathematical proofs, so the risks include misinterpretation or misapplication of the results of the calculations. As with any methodology, the quality of the output from these calculations is only has good as the information entered.

Just in Time Production has a “love hate” relationship with the business

According to Toyota, Just in Time (JIT) Production means to make only “what is needed, when it is needed and in the amount needed” (Just-in-Time — Philosophy of complete elimination of waste, 2013) Just in Time Production strives to reduce overall business costs via eliminating in-process excess inventory and their associated costs, thereby improving return on investment in a shorter period of time. JIT uses Kanban (Japanese for sign or billboard) cards to communicate between processes. Kanban cards typically consist of relevant product information, such as inventory or parts.

JIT has a simplistic philosophy – “the storage of unused inventory is a waste of resources” (Just in time (business), 2013) which sounds nice and really should be followed by any producer or service provider, but in reality it is difficult and expensive to truly achieve.

One important distinction of JIT is the idea that rather than production being pushed by available inventory, production “pulls” from inventory based on customer demand. Toyota uses the example where much like how supermarket shoppers only buy what they need when they need it, production only takes what it needs when it needs it from inventory, rather than continuing to produce units until the inventory is gone and there are unsold units that then need to be stored.

The benefits of a successful JIT implementation are; funds that were tied up in inventory can be used for more important functions, areas used for the storage of inventory can be used for other purposes of production, throughput time is reduced resulting in greater potential output and quicker response to customers, and defect rates are reduced resulting in less waste and greater customer satisfaction.

These benefits come with high risks however. If there is downtime in a process integral to the production, or an unforeseen shut down of even a minor component in the supply chain, the results can be lost sales and unsatisfied customers. If a company is going to only produce what is demanded only when it is demanded, they must be able to react quickly when there is a failure in their production, otherwise the costs associated with implementing JIT outweigh the benefits in a short period of time. Such an event happened to Toyota when a fire at a plant stopped the delivery of all brake parts. Within days, Toyota had to close down all of its Japanese assembly lines. By the time the supply of brake parts had been restored, Toyota had lost an estimated $15 billion in sales. (Toyota to Recalibrate, 1997)

Lean Manufacturing Thinking means reducing waste, reducing steps

According to the Lean Enterprise Institute, “The core idea is to maximize customer value while minimizing waste. Simply, lean means creating more value for customers with fewer resources.” (What is lean?, 2009)

There are five steps to the lean philosophy. First is to identify value by product family from the standpoint of the end customer. Second, identify all steps in the value stream for each product family and wherever possible eliminate the steps that do not create or add value. Third, make the steps in the value stream operate in tight sequence so the product will flow smoothly to the customer. Fourth, as the product flow is introduced, let the customer pull value from the value stream and fifth, seek perfection by reducing the number of steps and amount of time needed to serve the customer.

Henry Ford is credited with implementing the first lean production model in 1913 by integrating the idea of using replaceable parts in an assembly line rather than having skilled workers fit each part into the automobile when it was time to do so in the manufacturing process. Also, by implementing Lean Thinking Ford Motor Company was able to drop the retail price on an automobile so low even the workers could afford one, something unheard of at the time, and throughput was so high the company could overturn inventory in just a few days.

However, Ford suffered from lack of product variety. Henry Ford is quoted as saying “You can have any color you want, as long as it’s black”. Indeed, the Model A and Model T automobiles were only available in black, but in the early days of the automobile there were few competitors, so at first this wasn’t a problem. But Ford’s popularity with the automobile would soon betray them and more competitors were able to produce cars with greater variety, diminishing Ford’s sales.

Then in the 1930’s Kiichiro Toyoda discovered that by modifying the philosophy only slightly the problem of product variety could be solved. This modification began with shifting the focus of the engineer from individual machines to the flow of the product through the total process. To accomplish this, each machine should be the correct size for the amount of volume it produces, self-monitoring controls should be introduced to ensure quality, the machines should be lined up in a process sequence (assembly line), each machine should make small volumes of many part numbers, and finally each process step should notify the previous step of its current need for materials. By doing so, low cost, high variety of products, high quality and rapid cycle times could be achieved and information management would become easier.

The whole must always be greater than the sum

The three production philosophies all exemplify the same purpose – reducing waste in turn progresses the business towards perfection in delivering greater value to the customer. As with any theoretical and academic methodology or philosophy, the business must be able to adapt both its internal processes and use the methodology where appropriate. Ideally, a manufacturer using all three philosophies would benefit from them the most. Six Sigma reduces defects and in effect waste, JIT creates efficiency across all processes reducing overhead and excess inventory, and the tenets of Lean Thinking imply reusability and minimized resources to deliver greater value in shorter periods of time.

A very intriguing picture has developed in how the three philosophies are in effect time epochs in the evolution of mass production, and are in step with the technology associated with each of them. The industrial revolution brought giant machines working independently with labor intensive processes. Then came Lean Thinking and with it the assembly line with smaller production machines and reduced labor, evolving into Just in Time production with its reduced cycle times and reduced on hand inventory. Finally Six Sigma uses a collection of tiny integrated circuits (computers) to perform statistical calculations on reducing defects per millions of units.  The evolving principles of mass production has increased the amount and quality of output over the last 225 years by continually reducing the amount of labor and material required to create a single product.

 

References

Blakeslee, D. S. (2002). The New Strategic Six Sigma. Training and Development, 45-52.

Goding, M. H. (2001). Putting Six Sigma in Perspective. Quality, 58-62.

Just in time (business). (2013). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Just_in_time_(business)

Just-in-Time — Philosophy of complete elimination of waste. (2013). Retrieved from Toyota Global: http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/just-in-time.html

Kanban. (2013). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Kanban

Lean Manufacturing. (2013). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Lean_manufacturing

Six Sigma. (2009, November 6th). Retrieved from The Economist: http://www.economist.com/node/14301440

Six Sigma. (2013, March). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Six_Sigma

Toyota to Recalibrate. (1997, February 8). International Herald Tribune.

What is lean? (2009). Retrieved from Lean Enterprise Institute: http://www.lean.org/whatslean/

What is Six Sigma? (2013). Retrieved from SixSigma: http://www.isixsigma.com/new-to-six-sigma/getting-started/what-six-sigma/

 

TQM, Continuous Quality Improvement and Quality Circles; a love story



Total Quality Management (TQM) is a philosophy stating all employees are responsible for, and contribute to, a progressive increase in quality of the service or product sold to customers. Rather than a centralized and bureaucratic area of the company to oversee product and services quality, each member of the organization contributes to enhancing the overall quality of operations through continuous process improvement. According to the Economist (Total Quality Management, 2009) TQM is “built on the belief that quality is a matter of conforming to a customer’s requirements.” In his article, “The Eight Elements of TQM” (Padhi, 2010), Dr. Padhi writes, “Total quality is a description of the culture, attitude and organization of a company that strives to provide customers with products and services that satisfy their needs.”

Continuous Quality Improvement from TQM

Continuous quality improvement is the result of an organization implementing TQM, whereby the organization continually undergoes change to improve quality. High quality is achieved by meeting customer requirements, and to meet those requirements feedback is collected and integrated back into internal processes, and is used as a catalyst for change. The components of a typical continuous quality improvement model consist of organizational groups and teams, internal processes, customers and vendors. Continuous quality operates as a perpetual motion machine, where the last step in a process influences the motion of the first step, and the system as a whole is able to adapt and adjust to changing requirements. Continuous quality improvement does not function in a vacuum however, and it’s the efforts, insights and recommendations of the employees and management of the company that make it successful. Continuous quality improvement cannot be automated.

Quality Circles defined

Quality circles are volunteers within the organization who meet regularly to discuss and solve problems affecting the quality of their work. Quality circles consist of 6 to 14 volunteers who collect data and take surveys, and also reflect upon ways to increase efficiency and implement customer requirements into their own work. The purpose of a quality circle is to push decision making to the organizational level at which the people doing the work can implement their own (or other members) recommendations, because they know their work best.

But why do these teams consist of volunteers? Should not management assign and build these circles with what they believe to be the most relevant and effective people?  Using volunteers in a quality circle instills confidence in them that they have a voice, and helps remove inter-office political barriers preventing someone from participating and providing feedback. If a quality circle consisted only of assigned members, each member might feel like they were only doing what they’ve been told. Of course, one of the issues with this concept of volunteer quality improvement groups may be in motivating enough employees to participate. To help alleviate this, TQM managers should highlight the importance of a quality circle to the overall company, and associate volunteering with grasping a leadership opportunity, and potentially receive informal training on the operations of a different department than their own.

The core elements of TQM, as a house

According to (Padhi, 2010) there are eight elements of TQM, each of which directly influence continuous quality improvement activities. These eight elements are grouped into functional parts of an imaginary building, with a “foundation”, “bricks”, “binding mortar” and “roof”. This image of a building represents an organizations implementation of TQM and allegorically specifies the requirements for successful and realistic continuous quality improvement.

The TQM building’s “foundation” materials are ethics, integrity, and trust, indicating these are necessary for all other elements to function. Without them TQM is incomplete and if they are not fully implemented, TQM can adversely affect an organizations quality. Ethics and integrity influence decisions made by employees and management affecting the rest of the company and its partners and customers. High quality delivery of services or products are not sustainable if the persons involved are acting unethically, and this negativity can have a cascading effect on those who may be trying to act with good ethics and integrity. If there is little or no trust amongst the employees of a company, communication will break down and mistakes will continue uncorrected.

Next is the building’s “bricks” which are training, teamwork, quality improvement teams, and leadership. They represent human resource activities and organizational groups used to reach the “roof” of recognition. Bricks grouped together create a cohesive and orderly business unit, where each employee is given training to be highly productive, they work together as a team to receive quicker and better solutions to problems, and they form quality improvement teams to deal with specific broader problems. Bricks also comprise of leadership, the single most important element of TQM. Supervisors must lead their employees to practice TQM and must understand, believe in and demonstrate their understanding and commitment through their daily practices. TQM is a top down philosophy where continuous improvement is demonstrated by leaders. Without solid leadership, the values within TQM become much less important to the employees and run the risk of being generally ignored.

Next is the “binding mortar”, communication. This is the most appropriate analogy in the entire example, as without binding mortar bricks fall apart, and without solid communication, the employees cannot form effective teams to solve problems. Without solid communication, each person in the organization becomes an island uncoordinated with others in their efforts to improve quality. In the building analogy (Padhi, 2010) breaks communication down into three sub components, downward, upward and sideways communication. Downward communication comes from supervisors and leaders to make their employees “clear about TQM”. Upward communication then is the feedback from employees received by management in the form of suggestions and the overall efficacy of TQM. Sideways communication is inter department and horizontal to the employee or supervisor and includes vendors and customers.

Last is the “roof” consisting of recognition. The roof analogy is appropriate for recognition because without the roof on a building, the other parts will eventually degrade and crumble, leading to the eventual collapse of the building. When an organization does not recognize the efforts and skills of its workers, the workers become less and less inclined to improve their work. Recognizing the performance of the “bricks” and how quality is improving is extremely important if the quality improvement teams are to keep striving for higher quality. TQM activities require extra work and effort, and without recognition employees will simply fall back to just doing their assigned duties and gradually stop making suggestions. Just as the “roof” requires the foundation and walls are intact, recognition requires the 7 other elements of TQM are in place and functioning correctly, otherwise the recognition could be disregarded by the members of the company as being false and cheap.

TQM, Continuous Quality Improvement and Quality Circles working together

Using the analogy of TQM being the parts of a building illustrates how continuous quality improvement and quality circles fall within TQM. Continuous quality improvement is the result of the “bricks” and “binding mortar” effectively functioning, and it requires people to act ethically and receive recognition for their success. Quality circles are a component of the “bricks”, the self-organizing, and group of volunteers regularly communicating to solve problems and make corrections in their respective processes.

TQM is good for business and society

A successful motto for TQM would be “act with integrity, strive to improve your work and others, and quality will be recognized”. But implementing TQM, much like any other methodology for achieving high quality, comes at a cost. Costs involved with training, incentives, documentation, organizational changes and ensuring values are followed all add up over time. But there is a greater cost to not implementing TQM. The cost of losing customers, strategic partners, and valuable employees far outweigh the comparative nuances of implementing companywide policies.

The values of TQM appear somewhat obvious, almost as if they were carbon copies of what companies have been doing for centuries, rather than being a revolutionary concept devised in the 1950’s. But having a standardized list of policies and procedures helps a company more easily actuate what they already know to be correct. It acts as a roadmap, a charter, a documented agreement for everyone to understand and reflect upon.

TQM is not only about increasing sales revenue through satisfied customers, it’s about worker satisfaction too.  When a product or service is delivered by an employee who is satisfied with his or her company, it positively enhances the customers overall experience, which then positively reflects back to the employee, management and the organization.

References

Mohrman, E. E. (1985). Quality Circles after the Fad. Harvard Business Review, 67-71.

Padhi, N. (2010, Febrary 26). The Eight Elements of TQM. Retrieved from iSixSigma: http://www.isixsigma.com/methodology/total-quality-management-tqm/eight-elements-tqm/

Thompson, P. C. (1982). Quality Circles: How to Make Them Work in America. New York: AMACOM.

Total Quality Management. (n.d.). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Total_quality_management

Total Quality Management. (2009, Nov 16). Retrieved from The Economist: http://www.economist.com/node/14301657

 

 

#5 on Fortune Magazines “Most reputable companies”

 

International Business Machines

            International Business Machines (IBM) ranks 5th on the “Fortune 50 Most Reputable Companies” list with corporate headquarters in Armonk, New York. IBM manufactures computer hardware and software, provides Internet hosting services, and information technology consulting services.

IBM was founded in 1911 as the Computing Tabulating Recording Company (CTR) with the merger of three companies, the Tabulating Machine Company, International Time Recording Company and the Computing Scale Company. CTR would later adopt the name International Business Machines in 1924.

IBM’s beginnings are that of counting machines and time keeping devices. In the 1890’s, a wave of new immigrants coming from Europe and the rest of the world besieged the offices of the US Census Bureau. Realizing their current traditional methods for counting and tabulating were insufficient, the Bureau sponsored a contest for anyone to devise a better method and machine.  German immigrant Herman Hollerith won with his Punch Card Tabulating Machine and would later form the Tabulating Machine Company in 1896. In 1888, jeweler Willard Bundy invented the first time piece and a year later, his brother Harlow Bundy would form the Bundy Manufacturing Company, consolidated into the International Time Recording Company in 1900.

Throughout its history, IBM has been a global leader in the development of new technology. For example, in 1952 Arthur L. Samuel programmed an IBM 740 computing device to play checkers and “learn” from its experience making it the first computer capable of artificial intelligence. In 2011, IBM created a super computer nicknamed “Watson” after one of the company’s founders, Thomas J. Watson. “Watson” had incredible computing power, competing with human champions on the popular trivia TV game show “Jeopardy”, and winning.

Financially speaking, IBM has always been a profitable and sustainable company. In 2012, total assets were $109B and total liabilities amounted to $96B with $33B in total debt. Total revenue for 2012 was $104B with $82B in operating expense, and $15.9B in profit.

The company’s early motto was “THINK”, coined by President Thomas Watson in 1911, representing the drive to always be thinking about how to solve problems and create new products. This motto would later be used in the company’s product line of laptop computers, the “Thinkpad” and a product line of desktop computers called “ThinkCentre”. More recently, the company is promoting itself as a source of environmental sustainability using technology to promote energy efficiency and to connect people throughout the world.  IBM’s marketing of the phrase “Let’s build a smarter planet” promotes the company’s forays into urban management solutions, mobile accessibility for consumers and businesses, data and business analytics, national energy grid efficiency and “smarter” media and entertainment delivery. It also portrays IBM as a grand, globally involved corporation, with a nod towards environmental and ecological sustainability and responsibility.

IBM is one of the largest employers in the world with over 433,000 employees globally and their corporate culture encourages innovation and personal career building. On their (Why IBM?, 2013) web page, working at IBM means working with the “best and brightest” and employees are encouraged to “be an innovator” and “Collaborate with like-minded people in an environment that embraces individual differences, and rewards your best work.” On their (Our values at work being an IBMer, 2013) web page, they list three core values “Dedication to every client’s success. Innovation that matters, for our company and for the world. Trust and personal responsibility in all relationships.”

IBM also has a special Corporate Service Corps program used for community outreach and volunteer charity projects. In line with its motto “Let’s build a smarter planet”, IBM presents these events and projects as opportunities for employees to receive leadership training and development, and to develop new markets and global leaders. Smart.

IBM’s contemporary competitive edge stems from its sheer size and global market reach. Regarded as a common household name for computers and technology, IBM has a century long record of computing innovation. IBM leverages this reputation by targeting corporate and government customers (large enterprise), seizing opportunities to unify large and disparately located data and identify critical functions in large systems – building best practices and methodologies to lead the industry.

As the company has grown, it has chosen to slowly sunset its consumer manufacturing programs and sell them off (hence being considered within the Information Technology Services industry rather than the Computers industry with the likes of Apple). First and foremost was their product line of high performance, robust laptops, the “Thinkpad” which they decided in 2005 to sell to a Chinese company, Lenovo. Lenovo kept the brand name and has successfully sold the product line ever since. “Lexmark”, the company’s printer and printer supply program, was divested in 1991. IBM continues to manufacture and market its server product lines and has made significant investments into mainframe and supercomputing research projects (Chess competitor Deep Blue in 1997, Watson in 2011).

These supercomputing endeavors are in line with its efforts to grow its large enterprise and governmental markets, offering cloud services and business analytics, but they also promote an idealistic artificial intelligence – one that pits “man against machine”. IBM proudly supports the philosophy that machine is better than man at solving large complex problems with programs like Deep Blue and Watson.

That’s not to say IBM in any way shirks its corporate and social responsibilities. Surely it would be impossible for a company of this size to hold high regard among the world’s corporate executives with irresponsible social practices. Employing 433,000 people incurs a shared responsibility beyond the executive boardroom to ensure compliance with local customs and laws.

Fortune magazine outsourced the Top 50 Most Admired Companies survey data gathering and reporting to Hay Group Incorporated. In order for IBM to be included in the list, it had be one of 1400 companies; those in the Fortune 1000(largest US companies ranked by revenue), non-US companies on the Fortune 500 list ($10B or more in revenue) and the top foreign companies operating in the US. This list was then sorted by industry and pared down to the largest 15 companies for each international industry and the 10 largest for each US only industry. A total of 682 companies in 32 countries were then surveyed, including 3,855 executives, directors and security analysts. According to the CNN Money web page regarding how the results are compiled, (How we pick them, n.d.) “To create the 58 industry lists, Hay asked executives, directors, and analysts to rate companies in their own industry on nine criteria, from investment value to social responsibility.”

Each participant was asked to select the 10 companies they admired most, choosing from a list made up of companies that finished in the top 25% in 2011 plus those that finished in the top 20% of their respective industry, and any company could be chosen from any industry.

IBM was ranked 5th amongst all industries (1st in its own Information Technology Services industry) due to its 7% year over year increase in revenue, and to its revenue growth in what are referred to as “BRIC” countries, (Brazil, Russia, India, and China) countries with high growth and expanding economies utilizing its practices of business analytics, cloud services and “Smarter Planet” technology ideas.

Of the nine categories used in the survey, (Innovation, People Management, Use of Corporate Assets, Social Responsibility, Quality of Management, Financial Soundness, Long Term Investment, Quality of products/services, Global Competitiveness) IBM ranked 1st in all but two of them, People Management(3rd) and Quality of Management(2nd). These results are compared to companies within the same Information Technology Services industry as IBM, but considering the competition, (Accenture and Unisys) these results are an enormous indicator of the respect and admiration the world’s executive level employees have for IBM.

Ranking 5th amongst the world’s most reputable companies while employing 433,000 people globally, in addition to creating such grandiose technology to challenge the best human minds of the 21st century, is something only IBM could accomplish.  From creating the first timekeeping devices in the 1880’s, to enhancing energy grid efficiency with analytical software, IBM has consistently and intuitively progressed the human race forward with innovative and effective solutions.

References

Corporate Service Corps. (2013). Retrieved from IBM.com: http://www.ibm.com/ibm/responsibility/corporateservicecorps/

Deep Blue. (2013). Retrieved from IBM.com: http://www-03.ibm.com/ibm/history/ibm100/us/en/icons/deepblue/

History of IBM. (2013). Retrieved from IBM.com: http://www-03.ibm.com/ibm/history/history/history_intro.html

How we pick them. (n.d.). Retrieved from CNN Money: http://money.cnn.com/magazines/fortune/most-admired/2012/faq/

IBM. (2013, February). Retrieved from Wikipedia.com: http://en.wikipedia.org/wiki/IBM

Our values at work being an IBMer. (2013). Retrieved from IBM.com: http://www.ibm.com/ibm/values/us/

Time Clock. (2013, February). Retrieved from Wikipediea.com: http://en.wikipedia.org/wiki/Time_clock

Why IBM? (2013). Retrieved from IBM.com: http://www-03.ibm.com/employment/whyibm.html

World’s Most Admired Companies. (2013). Retrieved from CNN Money: http://money.cnn.com/magazines/fortune/most-admired/2012/full_list/

 

 

General Mills Incorporated

I wrote this paper for my “Principles of Management” class at Augsburg College. The assignment was to choose a company listed on “Fortune 100 best companies to work for” and General Mills came in at #72. I chose this company for it’s link to my agricultural background and it being a Minnesota company based in my city.

General Mills Incorporated, Golden Valley Minnesota

General Mills Incorporated is a Fortune 500 corporation headquartered in Golden Valley, Minnesota. General Mills was formed in 1928 under the direction of Washburn-Crosby President, James Ford Bell, merging 26 other flour mills. In 2001, General Mills merged with its arch rival, Pillsbury, one of the original flour milling companies from the 1860’s and 70’s.

General Mills has introduced numerous food product brands, including Betty Crocker®, Wheaties®, Hamburger Helper® and Cheerios®.  In 2012, General Mills completed nearly $17 billion in net sales with 25% coming from international markets.

According to a Securities Exchange Commission 10-Q filing in December of 2012, total liabilities and equity equaled $22 billion with $4.5 billion in current assets, and $14 billion in total liabilities. Globally, General Mills operates 79 food production facilities including locations in France, Venezuela, China and Australia.

General Mills has always been primarily focused on the production of food consumer products, and on investing in consumer brands to build market share and brand awareness. For example, in 1965 the company purchased Rainbow Crafts, the manufacturer of Play-Doh®, significantly reducing its production costs while increasing revenue. They sponsored several children’s cartoon and radio programs including The Lone Ranger in 1941, and Rocky and His Friends in 1959, later using these characters in General Mills advertisements. In doing so, they would increase their overall brand recognition and market share to be more inclusive of their target demographic of families and young children.

General Mills has a significant competitive edge in its marketing and branding reach, its vast product line, and its geographical location.  Not only is it competitively positioned in local, national and recently international markets with high quality and low cost goods, it is involved in the production of over 45 distinctive brands. From pancakes to pizza, breakfast to dinner, there’s a high probability each meal consumed in a day consists of at least one if not several General Mills brands. General Mills geographical location amongst the rich, vast corn and soybean fields of Minnesota helps reduce production costs and provides quicker time to market. This gives it even greater advantage in large foreign markets where fertile farmland is scarce. Since 2010, profits have increased 17.5%, compared to their biggest competitors, PepsiCo (1.9% increase) and Kraft (14.3% decrease); clearly demonstrating these advantages are producing results.

General Mills corporate mission statement, “Our mission is to make lives healthier, easier and richer. General Mills is nourishing lives”, focuses on sustainability and corporate responsibility. Claiming the title of 3rd largest food producer in the United States it has an ethical responsibility to produce healthy and fairly priced food. Corporate sustainability does not just refer to customers, but also to employees and strategic business partners, and General Mills has a long history of acquisitions and mergers with competitors and major brand owners. If it is to continue to support its vast and global food producing infrastructure, of which there is a moral imperative to do so, a strong long term vision and plan is critical.

In October of 2012, General Mills controversially joined a large number of other food producers in opposing California’s proposition 37, which would require all food labels indicate the presence of genetically modified ingredients. In a statement published on their website (State-based labeling laws, 2012), “We believe labeling regulations should be set at the national level, not state by state” and, quoting the FDA, “FDA has said a labeling policy like this ‘would be inherently misleading’ “. They also quote the American Medical Association (State-based labeling laws, 2012) ”Even the American Medical Association recently concluded ‘there is no scientific justification for special labeling of bioengineered foods.’” General Mills has a wide range of certified organic products available and has added Gluten free products to its offering as well. This indicates a willingness to change to meet demand and improve the general health of consumers, however small and incremental that change may be.

General Mills is in the position of being between food grower and consumer, and what General Mills believes they can sell to consumers they will demand from farmers. However, because General Mills is such a tour de force in the marketing of food consumer products, they could do more in convincing their customers to oppose genetically modified foods and offer even more organic products. It’s a difficult position indeed, where cost and value have to be navigated with care so as to not make food too expensive yet healthy. Certainly the higher costs to farmers from growing organic grain is a strong consideration in General Mills approach towards the issue.

The corporate culture at General Mills is clearly defined on its publically available website. “We do the right thing, all the time. We innovate in every aspect of our business. We build our great brands. We respect, develop and invest in our people. We strive for consistently superior performance.” The corporate messaging speaks to both employee and consumer in that it specifically mentions investing in its employees to strive for consistently superior performance. In April of 2012, Forbes magazine called General Mills “The Most Reputable Company in America”, raising the stakes to deliver on its outward corporate culture messaging as failing would result disastrous public relations ramifications. According to (America’s Most Reputable Companies, 2012), “General Mills blew everyone else out of the water this year. The global food giant’s pulse score totaled 83.03, which was 5.60 points higher than last year and 2.98 points higher than Kraft Foods, the second most reputable company. (General Mills) thrives on great citizenship, leadership, governance and products, is perceived as being a good corporate citizen by improving the health of their cereals”.

The Fortune 500 annual ranking of America’s largest corporations grouped by industry lists General Mills as the 3rd largest food producer along with a Fortune 500 ranking of 181. Their competitors, (#1 is PepsiCo, #2 is Kraft Foods, #4 is Kellog and #5 is Dean Foods) are not found on the Fortune 100 Best Companies to Work for list. This indicates the greater food production industry suffers from unfavorable employee regard towards their employers, making General Mills ranking all the more respectable. PepsiCo and Kraft rank significantly higher on the Fortune 500 list, but the fact they are missing from the Fortune 100 Best Companies to Work for list indicates they are too big with too many employees to achieve a favorable corporate climate. Only two companies on the Fortune 100 Best Companies to Work for has as many U.S. employees.

With 16,939 employees and a 1% increase in job growth since 2011, General Mills was number 63 on the Fortune “100 Best Companies To Work For In 2012” list. Fortune partners with the Great Place to Work Institute to conduct the survey, and over 227,000 respondents are included in the February 2012 report. Two-thirds of a company’s overall score is determined by the results of the Institutes “Trust Index” survey. According to (Best 100 Companies to Work for 2013 – Methodology – Fortune, 2013) the survey “asks questions related to their attitudes about management’s credibility, job satisfaction, and camaraderie.”

The remaining third of the calculated ranking according to (Best 100 Companies to Work for 2013 – Methodology – Fortune, 2013) “is based on responses to the institutes Culture Audit, which includes detailed questions about pay and benefit programs and a series of open ended questions about hiring practices, methods of internal communication, training, recognition programs, and diversity efforts”.  It should be noted according to (Best 100 Companies to Work for 2013 – Methodology – Fortune, 2013) “if news about a company comes to light that may significantly damage employees’ faith in management, we may exclude it from the list.” This indicates it is possible for a company to not make the list because of bad public relations, even though the employees are happy.

General Mills employees responded to the Fortune annual national survey by stating (100 best companies to work for, 2012) “the company offers careers, not jobs” and “85% of its officers were promoted from within, and started in entry level positions”. This indicates an adaptive approach to social sustainability as promoting internal employees rather than hiring reflects a determination to maintain the social structures in the business and local communities. Clearly, General Mills realizes hiring from within is preferable in terms of cost, because the experience and training of the current employee has already been paid for. This experienced employee is not only gracious and thankful for the promotion and therefore potentially a more productive employee, but their experience is specific to the company’s processes and policies than that of an outside firm.

All things being equal, I would personally enjoy working for General Mills. I understand their message, they have generally been a respectable company without scandal, and even with all the power they wield over my local community, country, and globally, they continue to grow in a socially and ethically responsible manner while maintaining a reliable and consistent corporate sustainability plan.

 

References

100 best companies to work for. (2012). Retrieved from CNN Money: http://money.cnn.com/magazines/fortune/best-companies/2012/snapshots/63.html

America’s Most Reputable Companies. (2012, April 4). Retrieved from Forbes: http://www.forbes.com/sites/jacquelynsmith/2012/04/04/americas-most-reputable-companies/

Best 100 Companies to Work for 2013 – Methodology – Fortune. (2013). Retrieved from CNN Money: http://money.cnn.com/magazines/fortune/best-companies/2013/faq/index.html

(2012, December 7). Form 10-Q. Washington, D.C.: Securities and Exchange Commission .

Fortune 500 2012 : Industry : Food Consumer Products. (2012). Retrieved from CNN Money: http://money.cnn.com/magazines/fortune/fortune500/2012/industries/198/

General Mills. (2013, February 15). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/General_mills

One of the world’s largest food companies. (2013). Retrieved from General Mills: http://www.generalmills.com

State-based labeling laws. (2012, November 13). Retrieved from General Mills: http://www.generalmills.com/Home/Responsibility/Environment/packaging/state_based_labeling

Who’s Funding Prop 37, Labeling for Genetically Engineered Foods? (2012, October 24). Retrieved from KCET.org: http://www.kcet.org/news/ballotbrief/elections2012/propositions/prop-37-funding-genetically-engineered-food.html