Dial's "transparent leader" comes to Wharton
Kevin Chan-A-Shing, WG'04
Issue date: 4/7/03 Section: News
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Baum immediately got to work at Dial halving the company's debt, dumping unprofitable businesses, spurring sales and targeting market share growth in top brands. How was this accomplished? Certainly Baum's reorganization of the company's operations into a business unit structure to place profit-and-loss responsibility within each operation was one factor. Similarly, reducing capital expenditure within annual depreciation provided much needed cash flow for growth. Most instrumental, however, was an offsite strategy meeting with staff to encourage more openness and better intra-corporate communication. According to Baum, "[Dial] was the most oppressive environment you could ever imagine." The result of the meeting was a new guideline for Dial's culture that stressed integrity, openness and innovation. It was Dial's newfound philosophy of employee empowerment that supported the effective implementation of its SFX01 strategy. SFX01 was an acronym unveiled in a meeting with New York investors in 2001 - "S" meant stabilizing business, "F" fixing problem businesses and "X" exploring opportunities to remain independent to sell the firm.
Baum's focus on teamwork and empowerment was obvious during his speech. In fact, the CEO stated "If you ever hear a guy going around talking about how he turned Dial around . . . he didn't . . . the people of Dial did." As evidence of his own open door policy he described a number of hilarious anecdotes about recent employee emails to him, from a request to fix bathroom problems in the accounting department to a complaint about a dead-bird outside headquarters that needed to be removed! Baum joked, "We went from a company where people just didn't trust management to one where anyone could be contacted directly." The results have been impressive, since August 2000, EPS has grown at a 39.6% CAGR, market share has grown in 3 of 4 brands and gross margins have improved 400 bps. In 2002 alone, Dial's market-capitalization grew $303 mm! "We are also using our core competencies in procurement, sales and marketing and manufacturing even more effectively." There is however, apparently more on the horizon. "We plan to introduce new businesses starting with a new fragrance for Purex this Summer." Baum explained that over 80% of Dial's business will be either new or refreshed over the next 3 years.
Baum's focus on teamwork and empowerment was obvious during his speech. In fact, the CEO stated "If you ever hear a guy going around talking about how he turned Dial around . . . he didn't . . . the people of Dial did." As evidence of his own open door policy he described a number of hilarious anecdotes about recent employee emails to him, from a request to fix bathroom problems in the accounting department to a complaint about a dead-bird outside headquarters that needed to be removed! Baum joked, "We went from a company where people just didn't trust management to one where anyone could be contacted directly." The results have been impressive, since August 2000, EPS has grown at a 39.6% CAGR, market share has grown in 3 of 4 brands and gross margins have improved 400 bps. In 2002 alone, Dial's market-capitalization grew $303 mm! "We are also using our core competencies in procurement, sales and marketing and manufacturing even more effectively." There is however, apparently more on the horizon. "We plan to introduce new businesses starting with a new fragrance for Purex this Summer." Baum explained that over 80% of Dial's business will be either new or refreshed over the next 3 years.