At Donnelley, manufacturing and sales were the core functions. Schneider observed:
In this company, you either make it or you sell it. Our divisions are therefore organized around manufacturing assets i.e., plants]. The trim size of the magazine, the binding requirements of the book-that's how we look at structure.
Highly autonomous, division managers were vice presidents who could choose the printing jobs they wanted to run and the equipment they wanted to buy. They sought the most profitable jobs because they w held accountable for operating profit, based on targets set during the budgeting process. Division P&Ls reflected plant revenues and costs, as well as allocations of corporate and selling expenses. Because most sales forces were aligned with business groups rather than divisions, each had a sales expense ratio that was applied to the work it sold into any plant.
Until 1991, division managers' incentive compensation was tied to their particular division's profit performance. This formula subsequently changed in the was oldest of the company, such as commercial printing, where the assets of individual divisions were similar and could be used for the same type of work. In these parts of the company, division-level incentives became groupwide in 1991, and sectorwide in 1993. As Jeff Majestic, financial director of the Information Services Group, explained:
We couldn't move work around when each division wanted to maximize its own profitability. Now the division directors ask, "What is the most profitable to run this job for way Donnelley?" because they can make the best decision for the company without its affecting their incentive pay.