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When Robert Lane, ’74, took the helm at John Deere five years ago, the company had great products, committed employees, customers who told their children to buy John Deere products, and a very desirable market share. But we weren’t in the pantheon of great business companies, producing for shareholders year after year. We asked, what has to happen for us to have a business equally as great as those products? he said. This is where the University of Chicago theories and focus on basic disciplines has been valuable to us.
Lane, CEO and chairman of the leading manufacturer of agricultural and forestry equipment, spoke to students as part of the Distinguished Speaker Series January 6 at the Chicago GSB Hyde Park Center.
Under his direction, Deere focused on aspirations, alignment, and awards. We aspired to a new level of performance. We wanted to perform, on average, better than our best year. And if we got the numbers, we wanted to do it in a sustainable way, he said.
To better align Deere, he had all 18,000 salaried employees write clear objectives; managers evaluated their progress every six months. It was performance management. The idea is, we're here to perform on a sustained basis, Lane said. But, he noted, Sometimes the ‘soft' disciplines are the hardest because they're so valuable to what you're doing. Getting the total workforce aligned can be harder than getting the physics right on a [global positioning system].
In lining up economic rewards, Lane said, People at our company are paid for creating economic value. Nobody gets paid for creating a dollar of EPS. There’s a short-term incentive based on operating return and operating assets, and there’s a mid-term incentive, which is sustained over four years, because there’s no interest in our company in some spurt to get some numbers created if it can’t be sustained year after year.
Lane invited GSB students to work for Deere after graduation. The way I explain it to our employees is, ‘No smoke, no mirrors, no tricksright down the middle.' That’s how we do business.
Patricia Houlihan