The Role of Tone From the Top December 28, 2009 Bob Lane, Chairman of John Deere Tone at the top, a much discussed term, is vital and necessary, but it is not sufficient for an ethical culture. For that, a strong tone needs to be reinforced, up and down the corporation, with defined processes, procedures and examples. The ethical fiber of a company does not rest solely in words or codes of conduct, but in the actual behavior observed by suppliers, dealers, customers, and employees. At John Deere this is summed up in a highly visible, frequently referenced shorthand known as ―the how.‖ Observers need jolting evidence of the tone at the top, often a resolute willingness on management‘s part to miss revenue or earnings targets — or even lose key talent — in order to do things the right way. Typically, in a high performance culture like John Deere, under these conditions no stone is left unturned in finding alternative ways to get the job done properly. Thus, in the end, rigorous performance targets are met squarely in the right way. Ironically, the unmistakable linking of words and deeds in all aspects of the business is one of the best ways to assure that ethical tone is matched with actions. At John Deere, for example, people came to realize that management was talking seriously about dramatically improving asset turnover, not an ethical issue per se. Skeptics reasonably thought that when a sale was potentially at risk, Deere would abandon its tough talk and revert to the standard industry practice of shipping an overabundance of product, even without firm evidence of retail activity. In the end, Deere‘s actions did match its words, and the business improved dramatically. In the same way, ethical talk requires the muscle of deeds, such as changing a supplier or avoiding business opportunities in certain countries when business cannot be conducted in the right way. In these cases, words are backed up with documented practices, processes, and procedures, all understood around the globe. In a widely published internal interview on only his second day on the job Sam Allen, the new President and CEO of John Deere, was asked, ―What are you going to change?‖ His response, very succinctly and wisely, was, ―It‘s too soon to tell what we‘re going to change. But what we‘re not going to change is ‗the how‘ and the way we do business.‖ A strong tone also means that company leadership is regularly engaged with the compliance function. At John Deere, Sam Allen, as CEO, meets one-on-one, every quarter, with the chief compliance officer and the chief internal control officer. They also meet separately with members of the Deere board. As a director, I am also privileged to observe similar strong practices at General Electric and Verizon Communications. At John Deere and other premier companies, high performing ethical leaders – increasingly from all parts of the world – continue to emerge, ...

1. The Role of Tone From the Top
December 28, 2009
Bob Lane, Chairman of John Deere
Tone at the top, a much discussed term, is vital and necessary,
but it is not sufficient for an
ethical culture. For that, a strong tone needs to be reinforced, up
and down the corporation, with
defined processes, procedures and examples. The ethical fiber
of a company does not rest solely
in words or codes of conduct, but in the actual behavior
observed by suppliers, dealers,
customers, and employees. At John Deere this is summed up in
a highly visible, frequently
referenced shorthand known as ―the how.‖
Observers need jolting evidence of the tone at the top, often a
resolute willingness on
management‘s part to miss revenue or earnings targets — or
even lose key talent — in order to
do things the right way. Typically, in a high performance
culture like John Deere, under these

2. conditions no stone is left unturned in finding alternative ways
to get the job done properly.
Thus, in the end, rigorous performance targets are met squarely
in the right way.
Ironically, the unmistakable linking of words and deeds in all
aspects of the business is one of
the best ways to assure that ethical tone is matched with
actions. At John Deere, for example,
people came to realize that management was talking seriously
about dramatically improving
asset turnover, not an ethical issue per se. Skeptics reasonably
thought that when a sale was
potentially at risk, Deere would abandon its tough talk and
revert to the standard industry
practice of shipping an overabundance of product, even without
firm evidence of retail activity.
In the end, Deere‘s actions did match its words, and the
business improved dramatically.
In the same way, ethical talk requires the muscle of deeds, such
as changing a supplier or
avoiding business opportunities in certain countries when
business cannot be conducted in the
right way. In these cases, words are backed up with documented
practices, processes, and

3. procedures, all understood around the globe.
In a widely published internal interview on only his second day
on the job Sam Allen, the new
President and CEO of John Deere, was asked, ―What are you
going to change?‖ His response,
very succinctly and wisely, was, ―It‘s too soon to tell what
we‘re going to change. But what
we‘re not going to change is ‗the how‘ and the way we do
business.‖
A strong tone also means that company leadership is regularly
engaged with the compliance
function. At John Deere, Sam Allen, as CEO, meets one-on-one,
every quarter, with the chief
compliance officer and the chief internal control officer. They
also meet separately with
members of the Deere board. As a director, I am also privileged
to observe similar strong
practices at General Electric and Verizon Communications.
At John Deere and other premier companies, high performing
ethical leaders – increasingly from
all parts of the world – continue to emerge, trained in proper
global processes and practices. As
they blossom, we can be optimistic that their words of integrity
will be unequivocally backed by

4. their actions.
5 Signs Your Company's in Distress
Rescue your business with these tips from a certified turnaround
professional.
Randy Myers | August 26, 2010
URL: http://www.entrepreneur.com/article/217260
After 25 years of rescuing distressed companies, certified
turnaround professional Renee Fellman has
seen it all. Companies with no business plan. Owners buying
fancy cars in spite of crumbling cash flows.
CEOs so focused on the top line that they couldn't see how
badly runaway costs were hurting the bottom
line.
Seeking to learn from the mistakes of others, we asked Fellman-
-the Portland, Ore.-based winner of the
1997 Turnaround of the Year Award from the Turnaround
Management Association--to identify some of
the most common gaffes she's seen over the course of 34
turnaround assignments.

5. Scan her list to make sure you're not guilty of these mistakes:
1. Not understanding, or not accurately preparing, financial
statements: No sports team would
compete without a precise way of keeping score. But,
incredibly, many troubled companies operate
without having accurate financial statements that the owner
fully understands, according to Fellman. In
one case, the company controller didn't understand the
difference between cost and accrual accounting.
A more common mistake is carrying old inventory on the books
at inflated values, masking the company's
true financial health.
The lesson: Make sure your financial statements are current and
accurate, or you risk flying blind.
Fellman likes to see statements monthly, and no more than five
days after month's end. "It's dangerous,"
she warns, "to wait any longer to find out that you just lost a
ton of money."
2. Keeping money-losing customers: Some customers simply
aren't worth having. They place too
many demands on your time or negotiate prices that don't cover
your costs. Yet failing companies
desperate for revenue often hold on to them, miring themselves
in a downward spiral of unprofitability.

6. The lesson: Get rid of them now. "Shedding money-losing
customers," says Fellman, "can be critical to
your survival."
3. Not understanding your costs: Turnaround experts have a
joke about the misguided entrepreneur:
"We're losing money on every job," the fellow concedes, "but
we'll make it up in volume." Fellman says
this is a common problem among failing companies that don't
know how to calculate their costs or don't
realize how important it is to do so. When that happens, the
company can't know which products or
services are boosting the bottom line and which are dragging it
down--or where prices need to be raised
or costs cut.
The lesson: Understanding your costs is imperative. If you
don't, take a crash course in cost accounting
or hire someone who can do it for you.
http://www.entrepreneur.com/article/217260
http://www.reneefellman.com/
http://www.entrepreneur.com/
4. Not having an organizational chart with clearly assigned
responsibilities: With no clear chain of

7. command, organizations can flounder. Fellman recalls working
with a company that was repeatedly cited
for failure to comply with FDA regulations. It had an
organizational chart, but when Fellman asked the
director of governmental compliance and the director of quality
assurance who was responsible for
ensuring FDA compliance, neither answered. Fellman put one in
charge, and in the FDA inspection
following her departure, the company received its first clean
bill of health.
The lesson: Companies can't perform optimally without a clear
delineation of authority and responsibility.
If you haven't spelled that out at your company, do it now.
5. Failing to control expenses and conserve cash: When she's
called in to rescue a failing firm,
Fellman first creates a plan to see how long the company's cash
will last, then takes whatever steps are
necessary to make sure it doesn't run out. "That may involve
laying people off, but more often it means
stopping unnecessary expenditures," Fellman says. Besides
fancy cars, she's seen failing companies
spending lavishly on trade show displays, on equipment they
don't need, and on television advertising
that's generating no measurable return.

8. The lesson: When a company is on the edge of disaster, cash is
king. And, as the recent recession and
credit crunch have shown, it's pretty important at other times,
too. Review your expenses now and make
sure you're not wasting precious resources.
The bottom line? With the economy still struggling to break the
shackles of the last recession, this is no
time to let business practices get sloppy. Follow Fellman's
advice to make sure you don't become her
next project.