Building an employer of choice

Pulse Survey Action PlanHertz FranceSeptember 2008

Think Local, Act Global

Think Global, Act Local

Transforming Hertz Europe’s largest Airport hubto better serve the internal customer – CDG employees

Making sense of 24 months of Projects Alpha and Genesis, numerous change initiatives, a dozen webcasts strategic communicationand then cascading the intended message in order that strategy be executed by employee eyes that look into the eyes of ourcustomers.

ActualEuropean

Organization

September 2008

RecommendedFrench &European

OrganizationWith Global

CustomerExperienceProgram

January 2009

“Think Global,

act Local”

“Think Local,

act Global”

HERTZ, France Pulse Survey Action PlanSeptembre, 2008

Table of contents:

Executive Summary –What Hertz France intends to accomplish and why.

1. How Hertz France plans to realize the objective of transforming Charles De Gaulle Airport into an

employer of choice.

2. The balanced scorecard concept

3. Making strategy everyone’s business at Charles De Gaulle Airport – “a 10 Step Process & and a

“Change Management Toolkit”

4. Pulse Action plan ingredients.

5. What are the GPEC and the French law that obligate French companies to negotiate an “Accord

GPEC”.

6. Hertz France’s current situation: “The State of the Union”.

7. What we need to measure and why we need to measure it.

8. The Performance Management Process cycle – how Hertz France intends to link CDG Airport

employee performance to local, regional, national and European Balanced Scorecard initiatives and

measures.

Executive Summary

Hertz France intends to transform Hertz Europe’s largest airport hub into an “Employer of Choice,” using innovation to fix

the basics at the same time as establishing Hertz France as “an employer of choice”. The first step towards this objective

will be to provide all Charles De Gaulle Airport employees –“those employees that have chosen Hertz France as their

employer” - with the same tools, training, development and career opportunities that the Corporation intends to implement

for it’s “future employees” worldwide . All local, regional and national activities and contributions will orchestrated to allow

Hertz France employees to align their daily activities in order to contribute to the pursuit of the European & Corporate

Balanced Scorecard objective of becoming an “employer of choice”.

Hertz France will accomplish this objective via the Pulse Survey action plan detailed in this presentation. This action plan intends to

address and transform low Pulse Survey scores (employee satisfaction) & lagging NPS scores (customer satisfaction) at the same

time as significantly reducing employee turnover and establishing CDG Airport, as the benchmark, for both Pulse Survey and NPS

scores in France.

Our objective is to make Hertz Europe’s biggest airport hub, an operation that stands out from the pack; an Airport that sets the

standards for everyone else. In so doing we will establish Hertz France as the benchmark for internal and external customer service in

the French car rental industry. We intend to accomplish this challenge by analyzing employee dissatisfaction starting with those

employees whose “eyes look into the eyes of our customers” – we’ll then work backwards up through the internal customer

hierarchy all the way to the Hertz France General Manager and his executive team. This process will allow Hertz France to involve and

mobilize all CDG Airport personnel (vehicle preparateurs, mechanics, CSRs, SM’s) and all the supporting and administrative staff

based at the “base arrière”. The Airport Manager and the Regional Director, responsible for CDG, will assure the link for the local to

regional aspect of our study. The regional Director, will in turn, provide the link from the regional to country level. The regional

Director will assure project coordination with the Hertz France Operations Director, based at Trappes, whose role will be to assure that

all support services – sales &, marketing, HR, quality, safety, finance, fleet, distribution, security, assurances, internal communication

IT support, business planning and, franchisees , ,- are totally aligned with, and whose actions contribute to, this process. In turn, the

Hertz France HR Business Partner will assure the communication and alignment of all outsourced Hertz France Service Level

Agreements, –training and development, facilities, purchasing, and support services. Equally, the Hertz France HIP Coordinator,

based at CDG, will guide us in our work and provide us with the information necessary to integrate and assure the necessary

coordination with the Talent Management COE, regarding the tools and training necessary to assure the long term success of all

implemented Hertz Improvement Programs.

European Pulse Survey Action Plan implemented following the results of the first European Pulse Survey of March 2007

We will correlate our results with Hertz France pulse survey results (both past and present) and reanalyze actions taken versus

progress attained following prior pulse survey actions. This step will enable us to prioritize our actions with regard to cost, impact and

desired result. This analysis will also provide Hertz France with a very comprehensive data base, indicating the problem areas we

need to action, what we need to change and why. Improving these identified problems permits a local, regional and national focus that

permits us to all Hertz France personnel to actively participate in the success of “their” Pulse Survey Action Plan. This national “team”

effort will provide the different information needed to orchestrate and implement of our Action Plan at CDG Airport as we work together

to leverage our employee Pulse Survey scores to “best in class” benchmarks.

We will then analyze this information internally with the various Centers of Expertise and their respective domain experts, in order to

prioritize actions and build “a common action plan”. The final plan will then be presented to the Hertz France General Manager and

executive committee for sponsorship, kick-off and execution. We will execute this action plan hand in hand with the different Centers

of Expertise that have been created to support us, and we will use the various tools that the Hertz Corporation has provided us.

Additionally Hertz France will use the Corporate Values supported by the Leadership and Competency models to guide and lead us in

our actions.

We will implement our action plan under the guidance of both the Talent Management Center of Expertise and the European HR

Business Partner team – both responsible for transforming Hertz Europe and the Corporation into an “Employer of Choice”. Our

objective here is to implement and adapt down to the operational level, “to those employees whose eyes look into our customer’s

eyes”, the various recruitment methods and tools, new hire induction materials, training & development programs and Learning

Management Systems that the Talent Management COE has been building for us, and is currently in the process of implementing

world-wide. If you can make it work t at CDG Airport you can implement the result in any other Hertz location in France, and “with

relative ease”. Our long term objective will be to successfully reproduce the resulting structures and identified best practices in all Hertz

France locations and for all of our employees.

The Hertz France Quality Director, responsible for Driving Hertz France’s Excellence will also play a key role in the successful

execution of our plan.

The projects that the Talent Management COE has been coordinating across the corporate world represent for Hertz France, the

cornerstones upon which we will successfully build the foundations necessary to execute our Pulse Survey action plan. We will also

build and establish in synergy, the KPI’s necessary to insure continuous progress on the various employee satisfaction improvement

measures that Hertz France has targeted. We will measure the success of our efforts by our capacity to align the execution of our

“action plan” on a local, regional, country, European and Corporate level. In doing so we will build, hand in hand, with the various

Centers of Expertise at our service, a structure that allows all Hertz France CDG Airport employees to have access to, and benefit

from, all Corporate, European and French employee satisfaction initiatives – of which individual training and development, career

planning and Performance Management programs are of greatest priority.

As we implement our Pulse Survey Action Plan we will find new and innovative ways to delight all of our customers…and always do

the basics much better than our competitors. This action plan is company wide and will be implemented in all Hertz Agencies, by

adapting and cascading throughout France, the results attained, the training and development methods and structures implemented

and the best practices initiated at CDG Airport,

This action plan concerns all Hertz France customers (internal and external) and is intended to be innovative, inspiring and engaging

for all French personnel. The Pulse Survey Action Plan is targeted at building a culture that provides a unique and differentiating

experience for both internal and external customers across France - at the same time as establishing Hertz France as an industry

benchmark for innovation, training & development, and most importantly for both “employee & customer satisfaction”.

With the various tools, Vision, Mission and Value toolkits, European and Corporate strategic architectures, Hoschin strategy maps,

Business Operating Systems, Mark Frissora and Michel Taride Webcast communications, Pulse survey data, strategic initiative

enablers, Improvement Processes and PMED programs provided to us by Hertz Corporate, the Université des Métiers, Hertz France

has created for all French managers a “Change Management Toolkit”.

This “Change Management Toolkit” has been engineered and constructed as a direct result of four, different day-long meetings, held

with employee elected French National Union Representatives. The objective, targeted by these meetings, was to provide a straight

forward and comprehensible explanation to our front line employee representatives, of the mechanics, initiatives and objectives of both

Hertz Corporate and European strategies. This communication, detailing the company’s strategy, is now a required process in French

labor law. The law has been implemented to mandate all French international and multi-national companies, to provide the necessary

structures to accompany the evolution and development of their workforces. This process places the responsibility on the employer to

assure the “employability” of French employees should they suffer job loss that is a direct result of a companies long term strategy or

reorganization. Hertz France intends to use to our advantage, the constructive relationship that we have built with our employee

elected National Union Representatives. This will enable both parties, to work hand in hand to achieve this objective together -

involving all Hertz France employees in the process

Another objective of the “Change Management Toolkit” is to provide all Hertz France managers , at the very least, the same

constructive and comprehensive understanding of Hertz Strategic architecture, as that given to our National Union Representatives..

In turn, managers will be expected to develop the competencies and skills that permit them to use this toolkit as an “innovative” means

to explain, bring to life and involve all team members in the execution of Hertz France, European and Corporate strategy locally,

regionally and nationally and in real-time.

The “Change Management Toolkit” is designed to evolve as corporate strategy evolves and changes - a never ending process of

taking the best of today to build the desired state of tomorrow. Hertz France intends to evolve thietoolkit and to communicate strategic

alignment measures to our management on a quarterly basis - in synergy with European and Corporate Webcasts and the various

messages diffused.

Hertz France’s internal communication has thus entered the information age, and by using today’s available technology, Corporate,

European and local strategy will be communicated, measured and adjusted in real time, everywhere and by everyone in Hertz

Agencies, Regional Offices and Head Quarters across France. All Hertz France employees will know exactly what is expected of them,

the means by which this expectation is to be achieved, as well as understand how they are measured and rewarded in terms of

objectives set versus performance attained.

The PMED initiative implemented world wide by the Talent Management COE in January 2008, has now been cascaded down to

middle management worldwide. The next step of the cascade process is planned in Q4 2008, and involves the station manager level

being integrated into the PMED process.

The PMED process will assure that all hertz France employees have a concrete understanding of the impact of how individual

employee actions on the local and regional level, impact the contribution that France Hertz makes on both the European and

Corporate stage – a virtual stage upon which Hertz stage managers around the world, orchestrate the cascade of Corporate strategy

to various, Hertz business divisions worldwide.

The “Change management” toolkit” integrates Corporate Vision, Mission & Values with the different elements of Corporate and

European strategy that Hertz France has succeeded in cascading down to the front-line. We have used the balanced scorecard

concept, introduced by Mark Frissora during his December 2006 inaugural employee webcast, as a means to vehicle our various

message and communications regarding our strategy. The BSC concept provides us with a structure to mobilize and align all

employee activities, and is used to provide Hertz France Managers with the methodology, information systems, and communication

structures, necessary to support continuous employee training and development measures. We will use the balance scorecard as a

social tool that generates synergy at all levels of our organization, as Hertz managers across France align local initiatives with both

individual and collective key performance indicators.

The BSC Concept permits Hertz France employees to successfully link French initiatives into the objectives detailed in the Hertz

Europe Balanced Scorecard. Our objective is to build a virtual bridge that aligns Hertz France employee’s daily objectives and

activities with the Hertz Europe Vision of tomorrow. It is via this process, in synergy with our various COE domain experts and HR

Business Partners, that Hertz France will transform CDG Airport into an “Employer of Choice”. We intend to achieve concrete results,

in-real-time, by translating Hertz’s Vision & Mission into goals and measures that are then cascaded and linked throughout our

organization by means of the balanced scorecard and our Hertz France strategy map.

Mark Frissora and his executive team have elaborated the Corporate Strategic Architecture around the balanced scorecard concept

and their definition of “focused performance”. The PMED process has been implemented to guide and develop all mangers in the

alignment and consequent implementation, cascade and achievement of both corporate and European strategy, at all levels of the

organization.

To focus on improvement, business concepts like strategy, value adding processes and performance measures must be connected

but remain flexible for custom design –“ focused performance is an approach that accomplishes this”.

General Human resource management and the accompanying soft competency skills required by managers, worldwide, are detailed

and brought to life by our corporate values. These values guide employee behaviors as they adapt to and implement the new Hertz

Leadership model, which in turn is supported by the Hertz Competency model. The PMED program, in turn, aligns and measures

employee performance against desired results, as strategy is cascaded down from the executive level down to those employees

whose eyes look into the eyes of our customer. In turn the results of the strategy need to be cascaded back up through the

organization in order to be constantly monitored, fine-tuned, as well as measured against Corporate desired results. Hoschin planning

and the PMED process provide us with the structures needed to accomplish this. Hertz France’s “Change Management Toolkit” is the

result of cascading strategy back up through the organization to the local executive level.

Hertz France has also created, in partnership with our National Union Representatives, a ten step process that uses the BSC as a tool

for creating a climate and common focus for change activities, at the same time as allowing Management to realign local objectives

with European strategy.

.

The slide above illustrates the ten step process defined to explain how corporate and European strategies come together. As stated

the balanced scorecard is used as a “concept” to cascade downwards and link Corporate & European objectives into national, regional

and local organizations. The Balanced Scorecard provides the cog that makes all the wheels of the strategy turn. In reality, it is no

more than a carefully selected set of measures derived from Hertz France’s strategy and driven by European and Corporate strategic

initiatives.

The measures selected for the scorecard represent a tool for Hertz France leaders and managers to use in communicating to our

employees and external stakeholders (outsourced Service Partners), the service agreement levels, outcomes and performance

driver’s, key to Hertz France achieving both our mission and strategic objectives. The final result of these actions will represent Hertz

France’s contribute to the construction of the Corporate Vision.

Hertz France intends to use this ten step process to communicate the strategy to those whose role it is to execute strategy – “every

employee at every level of the company”. This comprehensive, yet straight forward, step-by-step communication approach is

designed to create awareness, for all employees, of the strategic “big picture” (vision) as well as the projects and initiatives that have to

be implemented, (mission) in order to build and attain this desired state – Our Vision. This process allows us to align goals, incentives

and resources on the local, regional and national levels as Hertz France aligns our country level actions with European balanced

scorecard objectives and corporate strategy. Hertz France will make sure that strategy becomes the job of every employee and that

every employee has access to the training and development necessary to learn their lines and bring to life Hertz’s’ exemplary service

standards, as they perform their role in the “World Wide Hertz Corporate Show”.

As the various Genesis reengineering work processes produce their desired fruit, Hertz France will use the Université des Métiers, to

create knowledge sharing networks; networks constructed with the objective of assisting employees navigate and understand the

strategy by training themselves and preparing themselves to understand, execute and actively participate in the continuous

improvement processes that are required. This process will enable Hertz France to unlock, detect, develop, use and maximize hidden

employee talents.

In June 2008, Hertz Corporation Senior Management from around the world, met for their now annual convention, in Las Vegas.

Following the work sessions that took place, a presentation, entitled “Speeding Our Transformation – A call to action”,

was sent to all participants. As illustrated below, the last slide of this presentation communicates to Hertz Corporation Management

Worldwide, that “Leadership is the key and that participants are Hertz leaders; leaders who should

passionately deploy the tools that they have been given”.

Hertz France has used the “Change Management Toolkit” to further develop this message and to present in detail the tools given to us

by our European and Corporate Executives.

In terms of employee satisfaction, which falls under the balanced scorecard perspective of “Learning and Growth”, Hertz France has

linked into the European and Corporate (Learning and Growth perspective -through the Hoschin planning process), the objective of

successfully negotiating and signing an “Accord GPEC” with our National Union Representatives (social partners). This action directly

contributes to the European and Corporate BSC objective that Hertz become an “Employer of Choice”. The GPEC and its obligations

are detailed later in the presentation, and in French in Appendix I.

This gives Hertz France the following scenario; Corporate and European strategy to be implemented on the local level via an “Accord

GPEC”. The implementation of the “accord”, once signed, will be accompanied by the PMED program providing Hertz France

management, from top down, with a system to connect measure and appraise individual employee objectives and the role they play

collectively in the realization of strategy on local, regional and country levels.

Originally built to successfully integrate and “bring to life” new training laws for all employees, the “University des Métiers” provides

Hertz France with a “foundation stone” which furnishes the solid base upon which we cascade and link Hertz corporate and European

strategic initiatives down to those Hertz France frontline employees, “whose eyes look into the eyes of our customers”.

The last and most strategic corporate ingredient that we need to integrate in to our Pulse Survey Action Plan is that of the Global

Customer Experience Program. The success of this program will be tightly linked to the successful implementation of the New Hertz

Leadership model and the Competency model that supports it. These models provide the bedrock upon which the Hertz Corporation

intends to conduct a cultural transformation that aligns all Hertz employee’s eyes worldwide, in order to better serve and support, those

Hertz employees whose eyes look into the eyes of our customers. These two models form the foundations for the different changes in

terms of human management that will be implemented and linked into the corporate values. The resulting behaviors will permit Hertz

France to align and target training and development investments with the building of the skills and competencies essential to the

pursuit of our objective of becoming an “Employer of Choice” and French rental car industry’s reference for Employee and Customer

Satisfaction.

1. How Hertz France plans to realize the objective of transforming CDG Airport into an employer of choice:

During the period 2004–2005, roughly a dozen managers from Hertz France participated in the European Performance Management

Program. As participants were instructed in this training class, managing performance, our own and others, is a key activity in

developing an organizational culture and in achieving the strategic business objectives that are being requested in today’s difficult

economic environment. As part of Hertz’s strategy of continuous improvement, the Hertz Corporation is asking Hertz France

Management to create a culture where we apply the appropriate skills and behaviors for managing and maximizing the performance of

others using Corporate Values as a guide.

The European Performance Management program was built with this objective in mind. This program was aimed at all Hertz

management levels and was designed to help managers Europe-wide, develop these skills and behaviors in their respective

management populations, adapting them culturally, and cascading them downwards to local management. The initial implementation

phase of this program focused on senior Hertz European management. To date, almost 200 of Hertz Europe’s Senior & Middle

Managers have completed this course. In 2006, all European training managers participated in a train-the-trainer course in view to

assisting local upper management implement and cascade these performance measures and values down through the organization, at

the same time as developing a new Hertz European management culture.

The Performance management program has given participating managers the tools that they need to:

Ensure that the organization, and its individual components, meets its stated objectives by successfully managing the

performance of its people.

Provide support to managers in the increasingly complex role of managing people and their performance.

Create a consistent standard and style of managing people and their performance across Europe and to share practice and

experience in different contexts.

Participating European managers have also acquired:

An understanding of how an integrated performance management system contributes to the success of the organization.

An ability to consider the skills and knowledge required for an integrated performance management system.

Have received feedback on their own style of managing performance.

Have identified areas of strength and areas of development.

An understanding the phases of performance management.

Have considered their Myers Briggs Type Indicator (MBTI) and considered the implication of their personal

preferences on how they manage performance.

Have developed a positive and constructive understanding of differences between people and appreciated the importance of

valuing and working with different approaches and perspectives.

The ability to SMART objectives.

Have understood and have practiced the skills of coaching using the GROW model.

The ability to recognize the key principles of motivation and identify different sets of factors which tend to motivate and de-

motivate different employees.

An understanding of the principles of delegation.

An experience relating to a variety of different learning methods

An understanding of the importance of conducting effective appraisals and have practiced this skill.

The University des Métiers has been using the MBTI tool since 2005, to improve teamwork, communication, conflict management

and self-understanding. The questionnaire has been completed by more than 100 Hertz France HQ personnel, including all

Executive Committee members, the entire Finance, HR, IT and Fleet teams, various managers & supervisors as well as numerous

employees. The information furnished by the MBTI results, has allowed the University des Métiers to work on individual

development programs, as well as improving internal communication and increasing inter-service team work. Hertz France

intends to use this powerful, simple and non judgmental tool to provide the “human understanding” that will become the backbone

of our successful change management strategy; - important because change today is an eternal process that workforces worldwide

must constantly adapt to and evolve with. Hertz France will provide all employees with a framework to better understand human

behavior in the workplace –better understanding the behavior of others by first understanding ones own natural and inborn

preferences.

The MBTI uses a common and simple language that provides the foundation upon which all employees both collectively and at the

same time as developing future employee potential.

This understanding will rapidly become a strategic key competence for Hertz France Managers; a skill developed by managers to

align workforce skills and talents collectively, by managing individual training and development plans This methodology establishes

an important and individual relationship between the employee and the employer that he or she has chosen. This relationship

needs to be established during new hire induction for all future employees of an employer of choice.

2. The balanced scorecard concept

The balanced scorecard concept was first introduced to all Hertz European Station Managers in 2004-05 when European Training and

Development launched a “Managing Financial Performance” training program. This training program was completed by all European

Regional and Station Mangers and has provided a consistent approach to financial measurement across Europe

The training program has also provided local managers with strategic answers to such reoccurring questions as

How do we decide what we should be doing?

How do we balance our actions and allocate our resources over time?

How can we confirm that our necessary actions are actually being taken?

How do we determine if those actions are materializing into our expected improved results?

The balanced scorecard represents a carefully selected set of measures derived from an organization’s strategy.

Hertz France understands that the real concept of performance management is associated with an approach to creating a shared

vision of purpose and aims of the organization, helping each individual employee understand and recognize their part in contributing to

these aims, and in so doing manage and enhance the performance of both individuals and the organization.

The different local measures created by Hertz Europe’s balanced scorecard were as follows:

Organizations such as ours need a language for communicating strategy as well as clearly understood processes and systems that

guide employees as they implement the strategy and gain real-time feedback as to the results achieved. The BSC process helps

strategy to become everyone’s, everyday job. Every employee at every level of the Hertz France organization will understand his or

her role in the French Show.

Our Vision tells us where we are going. - “Hertz will be the first choice brand for vehicle and equipment rental and

total mobility solutions”.

Our strategy tells us what we want to achieve – “Corporate and European Strategic Architectures and their

initiatives.”

Our objectives tell us what actions we need to carry out. – “Strategy maps resulting form Hoschin planning sessions”.

The balanced scorecard tells us how we measure and communicate strategy implementation. “The “Change Management

Toolkit.

The balanced scorecard becomes the central organizational agenda for Hertz France, creating a credible force and mobilizing our

employees to behave in ways that create linkages and common decision templates.

The balanced scorecard concept is used as the catalyst that permits the real-time execution of the Hertz France Strategy map.

.

As employees can effectively implement a strategy only when they clearly understand the strategy and see how their actions

contribute to its achievement, Hertz France will provide our employees and managers with the training and tools that we have been

given or that our employees have requested, to align local Hertz Agency daily activities with the execution of Hertz France’s strategy

both regionally and nationally. Equally, we will make it one of our primary objectives to insure that Hertz France employees at all levels

are recognized for their contribution to the organizations success. The benchmark for the aforementioned objectives will be

established through the implementation of our Pulse Survey Action Plan at CDG Airport.

Mark Frissora used the balance scorecard concept to illustrate his future vision of Hertz, detailed in his first employee communication

in August 2006.. As Mark stated the balanced scorecard provides us with a system for measuring focused performance, i.e.,

“managing things that really matter”

Mark Frissora has defined focused performance for us as:

An approach for driving good trade-off decisions that balance share-holder, employee and customer requirements.

A flexible framework that makes company objectives actionable at all levels of the organization.

An approach for prioritizing improvement cross-functionally.

An integrator of effort to capture the most significant opportunities.

The result of this local BSC (balanced scorecard) implementation strategy is to provide all employee teams with clear goals and

objectives and the strategic feedback that encourages both continual learning and most importantly of all the team work and synergy

necessary to achieve them.

3. Making strategy everyone’s business at Charles De Gaulle Airport – “a 10 Step Process & and a

“Change Management Toolkit

The result of the various exchanges that the University des Métiers has conducted this year with Hertz France’s social partners, has

allowed us to understand the importance of translating strategy, at all levels, into a set of action-orientated performance measures,

instead of using control to achieve them. This collective understanding was materialized into a “10 Step process for understanding

strategy”.

This approach has also enabled Hertz France to confirm that by translating strategy into a language that is more precise (“a 10 step

framework for understanding strategy”) we are better able to communicate to our employees what we really want. Instead of

saying “let’s improve customer satisfaction”, we now say, “what we mean by customer satisfaction at Hertz and how we define

and measure it?” This also forces us to ask, “What skills are required to improve our customer satisfaction……what skills do

our employees already have and what skills will be needed for the future?”.

By monitoring this index using the dashboards that the corporation is providing for us, we will be able materialize the execution of “Our

Mission” in real-time as well as monitor and adjust how far away we are from getting to where we want to be tomorrow - Our Vision.

Hertz France further developed this “10 Step process to understanding strategy into the “Change Management Toolkit”. The toolkit

provides the solid information base upon which Hertz France plans to train, develop and guide all employees as they contribute to the

successful realization of our HR Hoschin objective –‘ making Hertz Europe’s biggest European Hub an “Employer of Choice’.

As already mentioned the discussions, held earlier on in the year, were conducted to explain Hertz Corporate and European strategy

to our National Union Representatives. The objective obtained, was that of cascading the explained strategy down to the level of the

Hertz employee whose eyes look into the eyes of our customers - the cascade of strategy down to the frontline and to those

responsible for executing the strategy. “The Change management Toolkit” is representative of the manner in which Hertz France

has communicated strategy down to the front-line employee level. This toolkit is how Hertz France intends to execute both Corporate

and European strategy on a local level and in synergy with all Hertz Corporation employees. The cascade down to the front-line and

the consequent reassessment of the information materialized by our toolkit, will allow corporate Executives to visualize Hertz France’s

understanding of the way in which our strategy is both understood and executed in the field, by those employees whose eyes look into

eyes of our customers. This achievement will allow Hertz France to revise corporate and European strategy in real-time as it weathers

both current economic, social and international environmental challenges. The “Change Management Toolkit” is Hertz France’s

GOLD.

An additional advantage spawned by the “joint partnership” approach to explaining and cascading strategy down to those the front-line,

is that we have sold the idea to our Social Partners, of building together the virtual Hertz of tomorrow. In addition we have presented

they tools and programs; currently being constructed, and that are needed to drive the management cultural change essential to the

successful execution of our strategy. The different soft and hard competencies required, as well as the means by which they will be

acquired (by employees at all levels of the company), will be treated and negotiated as part of the GPEC process that Hertz France is

currently conducting with our Social Partners.

With this important step in the right direction behind us, Hertz France intends to make it our long term goal to cultivate relationship that

positions our Social Partners as strategic partners, working alongside our Business Partners. Partners with whom we build, and

transform in to activities and action, the various initiatives and changes necessary for Hertz France to bring CDG Airport Employee

Pulse survey scores to the benchmark standard of “best in class”

4. Pulse action plan ingredients

Here are the Corporate and Local ingredients that Hertz France will address in our employee Pulse Survey Action Plan:

Top down Initiatives Bottom up Initiative

Strategy maps Accord GPEC

ACS Outsource – new Learning Management System Interface for decentralized learning strategy

Performance Management & Employee Development French training law reform

Cost Reduction initiatives Lean Sigma & Hertz Improvement Process

10 Corporate tools furnished by Corporate D.I.F – Individual training hour rights (20 hours/year/employee)

To bring this action plan to fruition, the University des Métiers intends to use the GPEC negotiation to build an agreement that details

the various actions and investments that Hertz France will conduct over a three year period, as we transform CDG Airport into the

French Benchmark for both employee and customer satisfaction and implement the results across France.

The short term objective targeted would be to conduct an inventory with local Airport employees at all levels – vehicle attendants,

mechanics CSR’s SM’s etc. and every level up through to our various steering and executive committees at Trappes HQ. This project

would be conducted in partnership with the National French Union Representatives responsible for negotiating the GPEC accord. The

objective of this inventory would be to identify, list, plan correction and then resolve the basic problems identified, and for which

concrete, corrective actions are pre-cursor to achieving our Hoschin corporate objective of becoming an “Employer of Choice”.

We will first “fix the basics”, and will do so by being “innovative. This will be Hertz France’s plan to restore employee confidence in

management fulfilling its promises. We have previously made promises to the employees of CDG airport that we have not been able

to deliver. We failed because the new COE’s and structures were in their initial organizational stages at the time, thus were unable to

provide the concrete actions behind the promises made. This deception can be easily righted – this is our intention with this action

plan. Once we have succeeded here, we will have the credibility necessary to cascade concrete solutions and structures, to all Hertz

agencies in airports, stations, towns and cities across France.

Ever declining pulse survey results have indicated that the “top down actions” such as many of those listed below, have little effect on

increasing the satisfaction of the Corporations 30,000 front-line staff and 1600 plus station managers.

Webcast Genesis information cascades

Ask Mark / Ask Michel Genesis section on website

Launch of communications tool-kits for managers Letters to employees

Industry analyst presentations Eliminating procedures

Global retention project Global talent acquisition

Performance Management and Employee Development process High potential and succession process

New organizational structure for Europe Commercial and Operating Councils

Launch of HIP, Hoschin, TVM, Six Sigma, Launch Customer Experience program

Major focus on reducing counter waiting times HIP Kaizens, Six Sigma

Continuous focus on NPS, including customer written feedback Hertz Gold locations extended in Europe

Online Check-In available to all customers around the world New Refueling Program Check-In

Introduction of Hoschin Introduction of PMED for 2009

New Leadership Competency model under development New Global HR organizational structure

New VP of Global Talent Management Launch of Global Talent Management

HIP training Hoschin training

Project management skills English language learning courses

New LSO provider in Learning & Development Employee Stock Purchase Scheme

Global Leadership Awards Global retention project in development

Flexible scheduling, where appropriate Global Leadership Awards

Global Talent Succession Planning New Leadership Competency model

Global retention project now in development Global Talent Succession Planning

o Sigma/Kaizens/5S BPR (reengineering processes)

Hertz France field based employees, have informed us that, employee satisfaction will be a long journey if we continue to only cascade

satisfaction measures top-down. What Hertz France employees want is additional bottom-up satisfaction measures. Measures that fix

the basics such as:

40% of Gold customers shouldn't be Gold Customers - no improvement in this area despite many promises to take care of

the problem

Our systems are old fashioned and out of date, especially compared with out competitors such as Avis and Europe Car

who are much faster than us in terms of service given the technology they have invested in, in terms of such things as

Instant return

Staff uniforms are "very often" out of stock - various sizes models not available

Despite numerous promises by MPF to reduce the number of procedures governing our daily ops, nothing has really

changed.

We must make our objective that of addressing & fixing these basics, as a precursor to improvement in both internal and external

customer satisfaction.

Hertz France’s Hoschin HR objective is to sign an agreement (accord) with our social partners before 31 12 2008. The GPEC will also

allow us to examine all current training methods, used at CDG, to integrate new hires, develop and prepare existing employees as well

as the methods and tools used to select, train and develop different Airport management personnel. The means of accessing and

tracking both individually and collectively the existing training offer and the tools already in place will also be examined in detail.

4. What is the « GPEC » – (Gestion ¨Prévisionnelle des Emplois et des Compétences?)

In a nutshell, the GPEC requires all French companies to reinforce their capability to better manage and prepare for evolutions in the

workplace resulting from international corporate strategies. This is achieved by negotiating the implementation of the Human

Resource structures necessary to develop, train and accompany the employees in teal-time and as their tasks and activities evolve. It

is as if the French Government has said, “Here you go Mr. Frissora and Mr. Taride, we would like for you to negotiate and come up

with an agreement that provides a satisfactory answer for both your company, your employees and your shareholders concerning the

following subjects, and, by the way, we expect this agreement to be negotiated and re-negotiated on a triennial basis”:

The way in which Hertz France will adjust its human resources in real time, as France initiates both corporate and European

objectives.

The different analyses and employee training and development necessary to develop and maintain employee versatility and

employability should their current employment disappear following evolution in the workplace.

Reinforce the customer experience by giving Hertz France employees, the competences and technical skills necessary to

provide the levels of service expected in today’s global, consumer world.

To conserve and mobilize collective employee skills and competencies for the benefit of Hertz France by providing all

employees with “life-long” training, development and career opportunities.

The GPEC law is thus “a Gold Mine” for Hertz France and we intend to use this “Gold Mine” to the advantage of all Hertz

France personnel, at the same time as transforming CDG airport into an employer of choice. Hertz France intends to do so by first

satisfying existing employees. We will do so by building the communication and training structures necessary to provide Hertz CDG

employees with the tools and competencies necessary to transform CDG airport into the benchmark for internal customer satisfaction

and an employer of choice in the French car rental industry.

The Hertz Corporation in implementing its Corporate Strategy must remain sensitive to Division cultural differences, especially at the

individual country level where laws and legislation often require Hertz France to creatively adapt strategy to local legislation. A “think

global, act local and think local, act global” approach should be encouraged whenever possible. An example of this kind of

“constraint” is the legislative obligation imposed on all French companies to negotiate, every three years, an “Accord GPEC”. Hertz

France plans on transforming this obligation into a strategic advantage.

This agreement (accord) once signed will outline the various recruitment, employee induction, and training and development structures,

agreed upon as necessary, for Hertz France to implement European and Corporate strategy over a three year period. Again, the

objective of this accord is to identify, prepare and accompany employees at all levels to the various technological and social evolutions,

necessary to take the company and its workforce from where it is today to its vision of tomorrow. A kind of imaginary bridge that

allows a company to provide structure and guidance to employees as they execute those strategic initiatives essential to building, in

synergy, the bridge that connects Hertz France today with Hertz Europe’s desired state of tomorrow. Such evolution often involves

existing jobs becoming redundant as well as the emergence of new job types or even new fields.

The slide below illustrates from a global point of view the objective sought after by the French Government in implementing the “Borloo

Law” on social cohesion (GPEC). As in the illustration we have to take the European strategic architecture and explain and negotiate,

with our Social Partners, where we are today as a company & where we want to be tomorrow as a company and most importantly how

we plan to get there. The resulting “Accord GPEC” details exactly what we need to build together in order to accompany our

employees both individually and collectively as the workforce implements the corporations strategic objectives.

The French Governments’ objective with the “Law Borloo on social cohesion” is to avoid, in the future, exactly what is happening at

Hertz France at present – restructuring and reorganization that has a detrimental effect on local employment - and for which many of

our employees have not been sufficiently prepared to reintegrate the French workforce. The negotiation process undertaken by the

GPEC is targeted at developing the employability of all employees, both collectively and individually, thus preparing them, for the

different evolutions and reorganizations that are constantly appearing in conjunction within today’s rapidly changing and global

economy.

The GPEC accord details the different structures and means that the company agrees to put into place to accompany employees

concerning the following points.

1. The company strategy and the manner in which this strategy and the changes or evolutions that it entails, are communicated in

real-time to the elected employee company representatives – Employee Work Council. The object of this point of the negotiation is to

agree on a temporal communications framework that allows the company to communicate, share and execute her strategy in real-time

and with the coordination and support of both employee company representatives (the Work Council) and the Company’s employee

elected Social Partners (Union Representatives).

Given the numerous work sessions that have taken place in 2008 and the resulting “10 Step Framework for understanding strategy”,”

which is the fruit of this joint effort, Hertz France considers that we have reached a point where the strategy is now being

communicated to our Social Partners as new information becomes available. At the last GPEC meeting, which took place at the end

of June, each participant received a CD Rom with key information from the webcasts of February, April and June of this year. Hertz

France has thus accomplished the objective outlined in point 1 above – it rests just to finalize the temporal structure that details the

manner in which evolving European and Corporate strategy will be communicated to the French Work Council and Social Partners.

This information will be detailed in the final accord that we intend to sign before 31 12 08.

2. With both the Company and her employee representatives now working now from the same “10 Step Strategy Framework” to

collectively understand Hertz France Strategy, the next step of the GPEC is to negotiate the different recruitment, training and

development structures and systems that must be put into place in order to successfully support, accompany and coach employees

through the different changes or evolutions provoked by the company’s long-term strategy.

3. The process requires a diagnostic of current job roles (activities performed) and the determining of the respective employee skills

and competencies necessary to accompany the company’s long term strategy. This diagnostic is the foundation upon which the

GPEC is built. We reconstruct all employee job descriptions using the activities performed on the job to determine the competences,

knowledge and skills necessary for the employee to do the job, and this for both today and tomorrow’s skill needs. The two illustrations

above illustrate this link.

It is in this sense that our GPEC obligation presents a real advantage to the Direction of Hertz France. A real advantage because, in

its own way, the GPEC mandates Hertz France to do exactly what Mark Frissora and Michel Taride are requesting on the corporate

and European levels, that is to say:

“Adapt Hertz Corporate & European Strategy locally, preparing employees by providing them with the tools and training

necessary to develop the professional skills, competencies and versatility required by current corporate values and culture

changes”.

6. Hertz France’s current situation: the “State of the Union”.

Thinking locally, acting global. Thinking global, acting locally

Hertz France has, through the use of the “Ten Step Framework for understanding strategy”, cascaded Corporate and European

strategic architecture to those employees whose eyes look into the eye of our customers. The result of this process is the construction

of the ”Change Management Toolkit” This toolkit combines the expected manager role directives, (communicated in March

2008 during the manager’s webcast) and the objectives and tools that the Hertz Corporation has made available to all management.

This is achieved in the form of an interactive PowerPoint presentation. Using our University des Métiers and the existing training

structure in place, we will assure the communication, cascade and the measure linkage necessary to align the execution of this

strategy locally across France.

Hertz France will take her current training structure materialized by the University des Métiers and build a recipe that uses the

corporate architecture in service of internal employee customer satisfaction. A service that will ensure that wherever in France there

are Hertz employees looking into the customers eyes, they are professional, well trained and “exemplary” in the level of service they

deliver- we all have customers wherever we are based or whatever our role is in the Hertz France show.

If we look at the illustration below you will note that with the Global COE for Talent Management Hertz has decided to take a top down

approach; an approach labeled “Best Practice” in the retail industry.

The objective of this top down training strategy is to engage field leadership in the training process while reaching for a broader

audience more consistently. This will shift ILT (Individual Learning Time) from front-line employees to Management, thus reducing

costs. This approach also leverages creative delivery methods such as e-learning, OTJ tools, mentoring and coaching to cascade

training across the organization.

This slide below illustrates the current situation from both a French corporate and local standpoint. Corporate initiatives are

represented at the top of the pyramid with Hertz Europe’s new interim structure supported by two corporate, top-down initiatives - the

new Hertz Leadership model and the Performance Management and Employee Development Process. The desired management

style is then expected to cascade down the organization from the top until its effects are experience by those Hertz employees whose

eyes look into our customer’s eyes.

The “Managers Change Communication Toolkit, will allow Hertz France to insure that our lower, middle and upper management have,

at the very least, access to the comprehensive understanding of this ten step process that we have cascaded down to the frontline.

The “Change Management Toolkit”, which is currently under finalization, was presented to our Social Partners during June’s GPEC

meeting and in turn to the HR Business Partner and his direct reports at the beginning of July. The HR Business Partner decided that

this toolkit should be sent to every Hertz France manager. Proposed next step was to furnish each member of French HR

management with a copy of the Toolkit for validation of information, copyright, structure and message. This step is still pending.

If we look at our current situation with all of the above mentioned rolled into one. This slide illustrates how our company is currently set

up to become an “employer of choice” and build, implement, and provide the Global Customer Experience that will differentiate Hertz

from her competitors – the little difference that makes all the difference and which gives the Hertz Corporation the merited acclamation

of Leader in her Industry

Going even further………….the above slide illustrates that with our current organization’s top-down approach, the greatest number of

eyes that look into our customer eyes are those eyes of our 30,000 frontline employees supported by the 1600 plus Location

Managers. These eyes are currently at the bottom of our organization.

Surely it makes more sense to reverse the situation in order to make, the final objective sought after in terms of the Customer

Experience, that of improving the service at the level of the employee that looks into the customers eyes. The slide below clearly

indicates the competitive advantage obtained, when we inverse our current structure with the objective of placing the organizations

focus on those eyes that look into the eyes of our customer’s – those of our thirty thousand plus front line employees and managers.

By turning the structure up-side down, we see that Hertz France has already transmitted the Corporate Balanced Scorecard tools and

measures to our front-line staff by providing them with a toolkit that unites all corporate communication to date, and presents French

corporate and local strategy in an innovative, interactive and dynamic real-timer basis.

The Four Customer promises illustrated in the slide below must first be applied and brought to life for Hertz’s internal customers, our

“employees of choice” – this includes everyone that directly or indirectly supports or comes into contact with frontline employees and

their managers – every Hertz France employee.

7. What we need to measure and why we need to measure it:

Measurements or Key Performance Indicators (KPI’s) need to be driven by the Hertz strategy and should cover all critical aspects of

performance and, should be specific for each level and type of position. Achievement of excellence on the performance measures

should result in excellent company performance.

In April 2008 Hertz France middle and upper Management from head office, field operations & sales met for a two day Hoschin

planning seminar. The objective of this work session was to use Hoschin planning to link Hertz France objectives into European BSC

objectives. The objective was to link Hertz France objectives in to the Four Perspectives of European Balanced scorecard and to

cascade these objectives throughout the organization using the resulting strategy map (see below).

The results have allowed Hertz France to translate corporate strategy into operational terms, ensuring clarity of the strategy across the

organization, at the same time as communicating through measurement. In so doing Hertz France will create a consensus and

reinforced teamwork through the process of developing the measures.

The balanced scorecard will allow Hertz France to communicate the multiple linked objectives that must be achieved to compete and

lead the market. The scorecard translates Hertz Mission and Strategy into tangible goals and measures.

7. Performance Management Process Cycle – How Hertz France intends to link CDG Airport employee

Performance to Local, Regional, Country and European Balanced Scorecard Initiatives and Measures

Figure A.1. Depicts a performance management process wheel with three elements, or arcs: focus,

communicate, and collaborate.

As previously stated, employees can effectively implement a strategy only when they clearly understand it

and can see how they contribute to its achievement. Employees and managers should be provided with

tools to align their work with the strategy, and should be recognized for their contribution to the organization’s

success.

A strategy-focused organization enables targeted feedback on strategic performance to specific employee

teams in order to effect continual strategy and implementation improvements.

Performance management involves people knowing that all members of their organization are focusing,

communicating, and collaborating on strategy from a single vantage point.

The performance management process contains three elements of an interactive cycle:

1. Focus.

The process of managing strategy begins with making choices and focus.

There will never be enough money or resources to chase every opportunity or market on the planet.

We are continually limited by scarce and precious resources and time, so focus is key — and strategy yields

focus.

In this important initial step, senior management defines and continuously adjusts its strategy.

Next, by mapping cause-and-effect relationships, management selects and defines strategic objectives

and higher-impact action steps and projects that will achieve those objectives.

Strategy maps are the key tools for developing focus.

Do not underestimate the importance of strategy maps.

They have been overshadowed by the popular “scorecard” that stars in arc number two; but those in the

know place far greater respect and emphasis on strategy maps compared to scorecards as the key to

successfully executing strategy.

Companies can ideally turn big goals into small, manageable projects that can be accomplished.

The first step in this translation is to create a set of strategic themes that will bridge the gap between the

existing state of operations and the desired state.

These themes then organize the work of the company and can be used to subdivide work among various

operating divisions, departments, and employees.

Whether you base your strategy on a balanced scorecard, the Malcolm Baldrige Award criteria, six sigma,

total quality management (TQM), or the lean management framework, an organization should define and

use clear, concise performance indicators that help its workers see the causes and effects of its strategy.

Strategy maps begin that process.

By focusing on critical areas, everyone can identify the true sources of business failure, as well as the best

practices that lead to future success.

This is also a logical place to link the strategy to the budgeting process.

2. Communicate with Feedback.

The process of managing strategy continues with communication.

This context is reserved for senior management articulating its strategy to its employees. (Webcasts)

Along with articulating strategy comes the all-important feedback to employee teams. (Pulse & PMED)

Remember the mantra, “How am I doing on what is important?”

A scorecard is the key tool for reinforcing communication of the strategy and for navigating the steps outlined

in the strategy map.

A scorecard has carefully selected and defined indicators and measures, each weighted to reflect its relative

level of importance, which is then weighted in the strategy map.

Think of a scorecard as a set of chain links of the strategy map’s strategic objectives, where each chain link

uses if-then relationships with leading and lagging measures to drive work efforts to align with the

organization’s mission and vision.

By integrating, distributing, and analyzing enterprise-wide information, an organization gains the power to act

on this information—ahead of its competitors.

The goal is to communicate a strategic vision to the entire workforce and empower employees to execute its

strategy proactively, before events occur that demand a reaction.

To stay ahead, individuals must draw on their organization’s business intelligence to make decisions based

on hard facts that are timely, not on assumptions and late news.

And when it is too late, sufficient enterprise intelligence should be accessible to conduct root-cause analysis

to fix the situation and get back on track.

3. Collaborate.

The process cycle of managing strategy continues with collaboration.

(The cycle never actually ends; it is a continuous iterative loop.)

By aligning various strategies among business units, the organization taps into the collective knowledge of its

employees and unleashes each person’s potential.

From the top desk to the desk top, e-mail discussion threads, based on feedback from key performance

indicator (KPI) scores from the scorecard, can be created for faster problem solving and consensus.

The performance management (PM) process truly makes executing strategy everyone’s job.

Collaboration, in this sense, is all about collective dialogue.

Management is not equivalent to control—management is coaching people for continuous improvement.

Strategy maps transcend time.

They will change as the executives adjust the mission and strategies.

In contrast, the scorecard will change periodically because the weightings for emphasis will be altered and

KPI’s will be added and removed to maintain focus and speed.

A simple way to think about the PM process cycle designed to manage strategies is that it embraces both

planning and the execution of the plan.

However, PM is greatly aided when managers and employee teams have access to and visibility of fact-based

intelligence so that the correct strategies are formulated and so that employee teams can analyze what is

happening in order to make better decisions. (Dashboards)

What happens when an organization’s strategy is unclear? It results in wasted energy. Most organizations

typically focus on their own crude version of the second two elements of the PM process wheel. This involves

monitoring and managing activities by focusing on completed actions, particularly when results are different

from those expected. This can be an ineffective exercise when wrong performance measures are examined.

To complicate matters, too many measures are usually reported, rather than the vital and relevant few, thus

leading to a “monitor everything” style without the organization really knowing in which direction it should be

going.

Management’s core shortcoming is they do not invest time in the first arc of the PM process wheel – to decide

what their strategic objectives are (ideally formulated with business intelligence) and then communicate them to

employees.

Let’s now discuss in greater depth the three arcs of the PM process wheel and the steps involved in constructing

this type of system. There are eight fundamental steps:

1. First, agree on the vision, mission, and strategic intent of the enterprise. Define the strategies.

2. Define the strategic objectives that support step 1.

3. Map the interrelated strategic objectives with their cause-and-effect linkages.

4. Define initiatives, projects, programs, and actions to close the performance gap for each strategic objective.

Scale back or terminate ongoing projects that do not support strategic objectives.

5. For each strategic objective, select appropriate strategic KPI’s (strategic measures). Cascade these strategic

measures to relevant parts of the organization, allowing them to define their own KPI’s (tactical and

operational measures) aimed at supporting the strategic KPI’s and maintaining a common and shared focus on

the strategy.

6. Select the target levels for each KPI for relevant time periods. Identify the performance deficiency gap.

7. Collect the actual KPI’s, display the scores, and compare to the targets.

8. Manage eventual performance gaps to steer the organization by interpreting and reacting to the score, and then

revise the actions plans.

Focus: Starting Point of the Performance

Management Process

The PM process begins with arc 1, “Focus.”

It is here that organizations, as previously mentioned, can turn big strategic objectives into smaller, manageable

projects and initiatives that can be accomplished.

These initiatives are the main way performance gaps are closed between the current state and the strategic

destinations.

Each initiative involves focusing and may result in upgrading or creating new capabilities, skills, and

technologies.

If the projects are linked to the correct strategic objectives that, in turn, support the mission and vision, then work

behavior is aligning with the overall strategy.

After the strategy is translated into a portfolio of initiatives and operational projects, then those can be reflected

in the annual budget, thus linking strategy to budgeting (or to rolling financial forecasts,).

This all sounds so logical. But how do we identify what the strategic objectives should be and,

subsequently, what to measure?

There are many methods and books devoted to defining strategies.

Let’s now explore the steps to develop an effective PM system.

Agree on the Vision and Mission, and then Define the Strategies

o At the risk of trivializing the critical and important defining of strategies, here is a straightforward

approach to constructing the strategy map.

o The initial exercise is to define your organization’s mission and vision statements.

o These two statements are not the same, and their definition must precede the construction of strategy

maps or scorecards because they serve as signposts.

The vision statement answers the question, “Where do we want to go?” in terms that describe a highly

desirable future state for the organization.

It says it all concisely, as these examples demonstrate:

USA President John F. Kennedy: “We will put a man on the moon.”

Microsoft Corporation (1990s): “A computer on every desk top.”

Microsoft Corporation (21st Century): “Information anywhere, anytime.”

SAS Institute, Inc.: “The Power to Know”

The Hertz Corporation (2008) “Hertz will be the first choice brand for vehicle and equipment rental and total

mobility solutions”.

The mission statement provides all employees, the answer to the question, “Why are we here?” in terms of

desirable impacts to gain a competitive edge, such as:

To exceed customer needs well ahead of their realization that they even have the need

To leverage technology capabilities in fulfilling customer needs.

To leverage employee capabilities for whatever we excel at.

Once the vision and mission statements are defined, the construction of the strategy map begins.

Its initial purpose is to serve as a framework in the form of a network connecting strategic objectives—

hence the name strategy map.

The strategic objectives collectively act like a pump system to push employee work efforts toward top

objectives.

Figure A.2 reveals that strategy maps and scorecards are born from the vision and mission statements;

help reinforce each other, as noted by the two-way arrow and are driven by the myriad of proven

improvement programs and initiatives both from the past and emerging now for the future.

The scorecard, serves to constantly remind the organization of the strategic plan.

However, don’t confuse the scorecard with improvement programs.

o The scorecard is an instrument for measurement and communication, whereas as the

improvement programs help change the “scores” in the scorecard to meet or exceed the KPI

target measures.

o Given that vision and mission statements exist, the next step is to construct the strategy map

itself.

Define the Hierarchy of Strategies and Their Underlying Strategic Objectives

Strategy maps (sometimes referred to as value driver trees) are used to communicate a unified view of the

overarching strategy to the organization.

A strategy map defines corporate direction and aligns internal processes, strategic objectives, initiatives; KPI

measures, and target scores. (KPI measures and target scores are more prominent in the scorecard)

One of the reasons was because the balanced scorecard was receiving inordinate attention, as if the

scorecard were the answer, when in fact it is the strategy map that serves as a builder’s blueprint for the

scorecard.

The strategy maps are like the secret sauce in this, recipe because their straightforward logic becomes so

compelling.

A study by Hewitt Associates estimated that companies who use strategy maps and scorecards

perform with 40% better results compared to companies that do not.1

One of the difficult challenges for executive management is defining its organization’s strategic objectives.

A popular, logical, and swift way to construct the strategy map that contains the strategic objectives is to

apply the strategic planning methodology SWOT (strengths, weaknesses, opportunities, and threats).

1 Brett Knowles, “Building Your Balanced Scorecard in Just Five Days,” presentation given on December 13, 2003; www.BetterManagement.com

SWOT is a brainstorming exercise that rapidly gathers the executive team’s thoughts about issues.

The information derived from a SWOT exercise becomes the raw material to form the strategic components

of the strategy maps.

(If a thoroughly documented strategy already exists, then you can go directly to step 3, but it is useful to read

how SWOT issues provide the building blocks for strategy maps and scorecards.) The SWOT exercise to

construct a strategy map has three phases:

1. Describe the SWOTs.

In only one day, a management team can write each SWOT on a note card.

Each SWOT should ideally be written with a consistent format: describing it as a fact, followed by it’s so-what

consequences that describe the future outcome or impact from the fact.

As an example, “Our competitor is now opening stores in the Southwest USA, which could adversely affect

our desire to attract the sizable retiree market that is growing there.”

Strength issues point to future outcomes as their so-what’s.

Weaknesses point to a so-what that prevents an organization from advancing.

Opportunities are things you are not now doing that would take you closer to the vision and mission.

Threats are usually external factors or risks that can derail your plans.

2. Group the SWOTs by common themes.

Regardless of whether the description is an S, W, O, or T, the hundred or so SWOT note cards can be

naturally clustered into themes such as “penetrate new markets” or “build alliances with consultants.”

Each theme should ideally capture the essence of the SWOTs related to it, and each theme should be

worded with a verb-noun format as the two examples just demonstrated.

The clustering of themes should be based on the fact in each SWOT, rather than on its so-what.

3. Place these themes onto a strategy map.

The themes have now blossomed into the strategic objectives—a metamorphosis.

The strategic objectives now become the stepping stones in the strategy map.

The elegance of the strategy map lies in the fact that important improvement projects and action programs

will sprout from each strategic objective to reflect the SWOT issues, while some existing projects will be

immediately abandoned because it becomes apparent they do not fit.

A variation on the SWOT approach to define strategic objectives is for executive management to create a

destination statement.

This is a textual statement, requiring consensus that describes a common shared view of the organization’s

future.

A key element of the to-be future state document is to describe the consequences, both good and bad, of

achieving the various aspects of their perceived destination.

It involves listing the actions (e.g., projects and initiatives) required to realize this future state.

It forces the executive team to create a vision of the results of achieving the destination.

This method concludes by summarizing the proposed actions as strategic objectives – so it effectively works

backward with the end in mind.

At this point, these themes that have blossomed into strategic objectives, regardless of the method used to

define strategic objectives, have yet to be organized or positioned among them. That now comes in the next

step.

4. Map the Interrelated Strategic Objectives with Their Cause-and-Effect Linkages

The strategic objectives are interrelated.

The four perspectives originally proposed in Kaplan and Norton’s balanced scorecard book are very useful in

simplifying what otherwise would be a difficult task.

That task is to take each of the strategic objectives that were congealed from clustering the SWOTs into

themes and slot it into whichever perspective it best fits.

The sequence of the four perspectives makes very good sense.

The top perspective (i.e., the financial perspective for commercial companies and the customer/stakeholder

view for the public sector company) is the beneficiary of the strategic objectives in the three perspectives

beneath it.

The bottom perspective, the learning and growth (or enabling assets) perspective, is the most foundational,

not unlike the foundation for a house.

It may be useful to think about the learning and growth perspective as not exclusively referring to people.

Expand your perception to include the following elements:

Employee competencies: What are we good at?

Culture: What is our climate to take action and our readiness for change?

Technology capabilities: What technical assets give us an edge?

An effective way to understand a strategy map is to visualize an example of a hypothetical one.

Figure A.3 illustrates a strategy map of a hypothetical XYZ Corporation, where each node in the

network represents a strategic objective.

It further adds if-then linkages where the paths drive, or at least contribute to, the outcome of the

strategic objectives above them.

Note that the objectives are rarely linked more than one-to-one.

A simple rule is that a linkage should be made only if there is an intended cause-and-desired-effect

connection, rather than because there would be an inconsequential result anyway.

An interesting question routinely asked is “Where is the organization’s strategy defined and located on

the strategy map?”

The simple answer it does not appear. Why not? Because the connected network of the strategic

objectives is equivalent to the strategy!

Hertz Growth initiatives

Strategic objectives are ideally worded in verb-noun format because these are the actions that an

organization must complete—or at least make much progress toward—in order to achieve the

organization’s mission, which in turn would realize its vision.

The verb-noun wording of strategic objectives also clarifies to employees that the role of the strategy

map is to tell employees and managers what the organization is looking for, rather than have the

executives state what they want the employees to do.

In short, the strategic objectives collectively are the strategy!

Strategic objectives are not all created equal.

The objectives located at the top of the strategy map are the primary ones that all of the other strategic

objectives drive to support.

Experience in constructing strategy maps has shown that the objectives in the top, second, and bottom

perspectives are likely more similar than dissimilar for most organizations.

These perspectives tend to contain universally popular strategic objectives. It is in the third perspective,

the internal business processes that strategic objectives are unique to an organization, the way

fingerprints are to a human being.

This is where an organization differentiates itself from other organizations (i.e., competitors).

The fact that the strategic objectives in the financial, customer, and learning and growth perspectives

have a common and universal flavor does not trivialize the strategy map.

It is the action steps and project initiatives, gleaned from the SWOT note cards that make the difference

as they are managed in order to achieve the strategic objectives.

Why should this make sense? The specific source of a scorecard’s elements—whether they come from

the executive team or the employees—tells the story.

Hertz France -current situation.

The “ChangeManagement Toolkit”has been created toprovide all managerswith the real-timeinformation necessaryto execute and adjustEuropean strategy inFrance in an everchanging economicenvironment.

CONCLUSION

This slide represents thecurrent strategicarchitecture in placewith which the HertzCorporation intends tolaunch its new GlobalCustomer ExperienceProgram.

If we turn ourstrategicarchitecture upside down wewould have astructure thatbetter supportsthe CustomerExperienceProgram andassures that allcorporate anddivisionstrategies arealigned towardsachieving thefinal resultintended by theinitiatives

This would assure that all Hertz employees’eyes are looking into their customer’s eyes andthat the organization evolves as a whole as itcommunicates about and implements the newGlobal Customer Experience Program. Everyemployee has a role in this new show runningin Hertz Agencies worldwide.

“From there I am standing all of this ispossible”.

Simon PENNY, ManagerUniversité des Métiers, Hertz France