Write a conclusion

CarMax, the Used Car Superstore: Learning for Performance Improvement CarMax, the nation's largest retailer of used cars, is improvement, the CarMax Web site states, We will headquartered in Richmond, Virginia, where its first never stop improving our systems, our processes, and store was opened. CarMax has grown from that one our policies." In short, CarMax is committed to organi- store in Richmond to more than 100 stores across the zational change that continually improves how the com- country."! CarMax promotes itself this way on its cor- pany operates. porate Web site: "We've sold more than 2 million cars. CarMax's commitment to continuous improvement We've appraised more than 5 million. And the news is relies heavily upon learning. The Talent Management buzzing with stories about CarMax, the experience we process is one way by which CarMax capitalizes on con- offer our customers, and the work environment we pro- tinuous learning. The use of learning loops is a second vide for our Associates." way by which CarMax fosters continuous improvement. The operations of CarMax are guided by its five- Talent Management for Continuous Learning point business concept: CarMax has strategic goals for Talent Management 1. We offer tens of thousands of used cars across the to ensure its workforce has the necessary skills to Slip- country: port company performance. According to Sean Ramage, 2. "Every car we sell has a low, no haggle price[:] CarMax's Director of Talent Management, Our com- 3. Our vehicles are superior in quality. Only the best pany has put a strong emphasis on the importance of cars meet our high standards:1 core competencies that drive behavior, which in turn, drives performance. Based on our short and long- 4. "We'll buy your car whether you buy from us or term goals, we partner with company leadership to put not; and together programs that support the competency needs/ 5. "You'll get friendly customer service." gaps that drive the desired performance goals." Writing in The RMA Journal, Casey Thormahlen Ramage points out that Car Max regularly surveys its associates and managers to ascertain what is needed to and George Van Horn, suggest new car dealers that sell achieve their individual work objectives and to improve lised cars can learn a great deal from CarMax. They say performance. CarMax combines this survey informa- that "Inlew-car dealers looking to expand their used-car tion with assessment data from other sources, including operations should take a page out of CarMax's play- book. CarMax ... has consistently outpaced its more performance reviews and management assessment pro- grams. Ramage indicates this comprehensive assessment traditional rivals by offering a more pleasant buying experience, Sales commissions are set on a per-vehicle approach links employee competencies with business basis (rather than by percent of sale), prices are fixed, objectives and promotes a genuine continuous learning and buyers are given a transparent, itemized price break- As part of the continuous learning process, Car Max down. A robust parts and services department creates further economies of scale for dealers choosing this path, monitors trends in Talent Management and human re- allowing for modest repairs that enhance the resale value sources as well as overall societal trends. And Car Max monitors emerging technologies to provide the right of incoming trade-ins."4 CarMax asserts its operations are firmly based on tools to help associates develop the competencies they a foundation of ten values that seek to treat custom- need to have to excel at their roles." ers, CarMax associates, and investors with trustworthi Learning Loops ness and ethical practices while merging the best retail Another way in which CarMax incorporates learning practices with the needs and demands of the automo into its continuous improvement commitment is through tive industry. One of the ten values guiding CarMax learning loops. Sccessful learning loops incorporate is continuous improvement. With regard to continuous five basic features Forst, the company develops effective process. answer for CarMax. Is this a viable answer for other businesses? performance measures and targets linked to the firm's values, vision, and goals. Second, performance infor- mation is communicated quickly, clearly, and usefully. Third, performance information is shared with the right people, and they are empowered to act on the informa- tion. Fourth, people are encouraged to suggest changes to improve performance, and the company works to overcome barriers to implementing performance im- provements. Fifth, the company monitors the process to ensure its learning loops are fostering increased learning and increased performance." These features can be seen in CarMax's use of learn- ing loops, which can be implemented anywhere in the organization to accelerate the pace of change" 'l At Car- Max, CEO Austin Ligon holds regular sessions with employees to share the latest performance information. During a collaborative analysis of the shared informa- tion, Ligon asks questions such as: "What is it that we may be doing that could be considered unnecessary, or stupid?"12 Ligon participates in these brainstorming ses sions, ensuring "every idea is recorded and receives a response."13 Learning for Performance Improvement What is the key to improving performance? In consider- ing the question, learning seems to be the unequivocal Discussion Questions 1. How is continuous improvement linked to organi- zational change? 2. What external forces for change are likely to in fluence CarMax's commitment to continuous improvement? 3. What internal forces for change are likely to in- fluence CarMax's commitment to continuous improvement? 4. Explain Car Max's use of (a) talent management for continuous learning and (b) learning loops from the perspectives of incremental change, strategic change, and transformational change. 5. What are the primary organizational devel- opment interventions that are embedded in CarMax's fostering of learning for continuous improvement? SOURCE: This case was written by Michael K. McCuddy, The Louis S. and Mary L. Morgal Chair of Christian Business Ethics and Professor of Man- agement, College of Business Administration, Valparaiso University