Dialog, a statistical tool used by Ericsson at group level, is one way the company measures progress in corporate culture and employee development.
An operation that is going to advance has to strive constantly to achieve targets. To see if you are reaching your targets, you have to measure performance. “Not measuring is like playing football in the dark,” says Cathrine Vincenti, responsible at group level for Dialog. “You turn the light on occasionally to see if the ball is in the net.”
Vincenti says the Dialog results can really be compared only since 2004, the year all Ericsson employees were asked to respond to the questionnaire at the same time, in October.
One important way of measuring results is the Human Capital Index (HCI). This includes areas such as competence, motivation, responsibility and initiative, empowerment, cooperation and process, as well as operational excellence. Employees who are ‘empowered’ act on their own initiative to attain the company’s objectives.
The HCI showed an increase of 10 percentage points from 2004 to 2005.
“This was due above all to the emphasis by group management on the HCI that year,” Vincenti says. “The local HCI results were one of the targets that affected the variable elements of managers’ salaries. That usually produces rapid effects, especially in cultures that are objective-oriented as in Scandinavia. And by taking measurements at the same time everywhere, the managers could start comparing themselves with each other – and nobody wanted to come off worst.”
Each year, group management monitors the operations that end up at the bottom of the measurement tables. “We ask ourselves how we can help the local managers to improve for the following year. And in the same way we work actively to circulate knowledge about all the good examples of local improvement measures,” Vincenti says.
PEOPLE WANT TO SUCCEED
One operation that has for many years stood out because of its excellent Dialog scores is Ericsson Nikola Tesla, Ericsson’s subsidiary in Croatia. Since 2000, the unit’s results have always been better than average for the group.
“One explanation is our ambition never to underestimate the importance of individuals,” says Gordana Kovačević, president of Ericsson Nikola Tesla. ”Human capital is the key to success. This applies to both managers and their staff. People want to succeed and they do so if they are given the right conditions.”
The educational qualifications of employees reflect developments in the sector. Today, more than 85 percent of people employed by the Croatian subsidiary are graduates, compared with just over 20 percent ten years ago.
“We know what good conditions mean for our staff,” says Kovačević.
They would want to:
• develop and meet new challenges all the time
• know where the company is going – vision
• know what is expected of them
• know what they are meant to achieve – not how to do so (management by objectives)
• a lot of influence over their work and working hours
• be made accountable for their results
• feel important
• work for a winner
IMPROVED LEADERSHIP INDEX
The climate at Ericsson can also be measured through its Leadership Index. This has improved consistently since 2000. From 2004 to 2005 this index underwent exactly the same change as the HCI.
Vincenti explains: “I think this is because we all felt for the first time that we had really completed the structural changes and cutbacks. The employees could breathe freely and we had a simpler organization. Of course the fact that we were doing good business and were beginning to make a decent amount of money also helped to improve the mood.”
What is remarkable is the massive support Dialog indicates for the motto “One Ericsson”. At the same time “Simplicity” is a watchword that employees find difficult to take to heart. It is as if there was some innate pride that “things have to be a little difficult – otherwise they are not up to Ericsson’s standards”.
Research International (formerly known as Sifo) is the consultancy that helps Ericsson in the Dialog surveys. Research International’s analytical model for explaining changes and identifying success factors is based on the same figures as those used by Carl-Henric Svanberg when he talks about the parameters that characterize a company that wants to attain “true world leadership”: employee attitudes, operating margins and customer satisfaction.
“As long as I can keep track of these three figures, I can sleep well at nights,” Svanberg often says when he meets staff”
Author: Svenolof Karlsson & Anders Lugn