University Of Massachusetts – Dartmouth
MGT 650
Spring 2014

Research Paper on DreamWorks Animation SKG (DWA)

Submitted by:
Hardik Ranpara

Company Background:
DreamWorks Studios SKG is a motion picture company, which was founded by Steven Spielberg, Jeffrey Katzenberg, and David Geffen on 12th October 1994. The suffix ‘SKG’ is the initials of the three founders. At the time of foundation, Jeffrey Katzenberg, not long ago, had resigned from Walt Disney Animation Studios. Currently, the company is partnered by Steven Spielberg, Stacey Snider and The Reliance Anil Dhirubhai Ambani Group. The first movie released by DreamWorks was ‘The Peacemaker’ in September 1997 and the first animated movie released was ‘Antz’ in 1998, and also ‘The Prince of Egypt’ in same year. (Our History, 2010). Both the movies were made using ‘Computer-Generated Imagery’ (CGI) technology along with traditional animation techniques.
Because of great success of CGI movies, DreamWorks SKG created new division named DreamWorks Animation in year 2000. It would produce both kind of animated feature films. In year 2001, Shrek went on to win first Academy Award for Best Animated Feature Film. After success of Shrek, Shrek 2 and Shark Tale was release in year 2004. DreamWorks Animation was the first studio to produce two CG movies in one year. (DreamWorks Animation, May 3, 2014.)
With immense success, the animation division was turned into different publicly traded company named DreamWorks Animation (DWA) and was incorporated on 28th October 2004. Being a separate company DWA produces animated films and television programs. Jeffery Katzenberg became the CEO of DWA. (Our History, 2010)
As of 2013, company’s net revenue was $ 706.9 million and it employed nearly 2100 employees. (DreamWorks Animation, 2014)
DreamWorks Animation SKG was ranked 12th, 14th, and 10th in year 2013, 2012, 2011 respectively by Fortune in the list of 100 Best Companies to Work For. 2013 was the fifth consecutive time the company was included in the list. (100 Best Companies to Work For, 2011, 2012, 2013)
DWA has released 28 movies till date. Some of the well-known movies are Kung-fu-panda series, Madagascar series, How to Train Your Dragon, Shrek Series, etc. Shrek 2 earning highest gross of $ 9.19 billion. (DreamWorks Animation, May 3, 2014)

Organizational Culture:
At the heart of DreamWorks Animation is the desire to tell great stories and inspire audiences. Company culture not only encourages employees to create but also to innovate and, ultimately, to have fun! (Our Culture, 2013)
Quote from CEO Jeffery Katzenberg:
“…We have transformed over the years from hand-drawn animation to computer-generated films to being a leader in 3D entertainment. Our strategy has remained the same: to produce great stories that are creatively driven and technologically state-of-art. In pursuit of this goal I’m proud to say that what defines DreamWorks Animation more than anything else is the dedication and expertise of our people” (Our Culture, 2013)

1) Recognition and Rewards:
DWA gives most importance to its employees and because of the same; it gets best out of its employees. DWA’s culture is built around its employees to give them utmost job satisfaction and motivation to get creative and innovative ideas for new projects. Building the organization centered to employees, many motivational theories can be observed in the way DWA operates.
Jeffery Katzenberg says: “The thing that I have learned and I only wish that I knew it twenty-five or thirty years ago, which is to honor and celebrate, recognize and reward your employees and their work – is a fantastic business strategy. If they love their work, they love coming to work, they will strive to do great work and you’ll succeed.” (Jeffery Katzenberg Says Honoring Employees is Good Business Strategy, March 30, 2012)
Two-Factor Theory by Frederick Herzberg (Bien, Schermerhorn, Osborn, 2013.) can be applied here. Two-Factor Theory identifies:
(a) Hygiene Factors (example: Working Condition, Basic Salary), which are found in Job Context, as the sources of Job Dissatisfaction. If the Hygiene Factors are poor, it results in Job Dissatisfaction. But if Hygiene Factors are improved, it doesn’t result in Job Satisfaction, it only results in low Job Dissatisfaction. (Bien et al., 2013.)
(b) Motivator Factors (example: Recognition, Achievement, Work Itself), which are found in Job Content, are the sources of Job Satisfaction. If the Motivator Factors are present, it will result in Job Satisfaction, Motivation and Performance. (Bien et al., 2013.)
DWA celebrates and recognizes as well as rewards good performances of the employees. This gives the employees Intrinsic as well as Extrinsic Motivation to perform at their best. This also creates the environment of healthy and friendly competition between the employees, which enhances the creativity and performance.

2) Job Security:
DWA is into making animated movies, which requires high creativity and imagination. Employees continuously have to come up with different imaginative stories to capture the mind and attention of the audience. The core competency of DWA has to be creativity and creativity comes from its employees. Because of this it is very necessary for its employees to be stress free and have a sense of security so that they can get new ideas for projects.
In order to boost creativity, DWA has created a culture, which has immense sense of security. In an interview with USA Today’s Mike Snider, Katzenberg says, “We can say to our storytellers, there’s no limitation on your imagination. If you can dream it, we’ve got somebody who’s going to figure out how to make it happen.” (DreamWorks Animation CEO Katzenberg offers advice, October 22, 2012)
Dan Satterthwaite, head of human resource says, “We are extraordinarily focused on creating a stable environment for people to do work in, and as a result, we have a 90-98% retention rate. When the great recession began . . . we cut operational costs like everyone, but the last thing we were going to do was let our people go. In late January 2009, our CEO got in front of everyone and said as much. So everyone felt stable, secure about their positions, protected – and could therefore continue to do their best work.” (Building Trust in Business 2012, 2012)
Layoffs are against the culture of DWA. Both, above-mentioned sayings, shows that DWA lays great emphasis on making its employees feel secured and giving them high feeling of Job Security.
Abraham Maslow’s Hierarchy of Needs Theory mentions Need for Security as one of the factors of motivation for the employees. It states that Need for security, protection, and stability in the physical and interpersonal events of day-to-day life act as a motivational factor for the employees. (Bien et al., 2013.) As the employees have feeling of security, they are highly motivated to think creatively without any fear of getting dismissed from the job. Because of this, DWA is able to generate imaginative ideas that can capture the imagination of audience.
Also, Two-Factor Theory mentions ‘Status and Security’ as Hygiene Factor. (Bien et al., 2013.) Employees at DWA, with high feeling of security, have least Job Dissatisfaction and are able to think creatively without any issue hindering or limiting the imagination.

3) Training and Development:
DWA, being into animation industry, has to keep up with new technology to produce movies having new effects that uses new techniques. It is very fast changing fast changing industry and DWA has to keep pace with it in order to outperform its competitors. Movie that has new animations and effects, using new techniques and technology, will receive high ratings and will earn more revenues.
With the change in technology and techniques, DWA kept its culture unchanged by not laying-off the existing employees who wouldn’t know how to use new technology and techniques. DWA moved from hand-drawn animation to CGI animation techniques. It again had transition from CGI animation techniques to 3D animation techniques. Both times, DWA didn’t layoff any employee. It trained the employees to use new technology effectively to create imaginative animations. (Organizational Culture at DreamWorks Animation, 2013)
DWA also encourages free communication across different departmental and hierarchy. All the employees of DWA for any department can share ideas with each other. Employees were trained to effectively put forward their ideas. Workshop called ‘Life’s a Pitch’ helps employees to develop and sharpen their presentation skills so that they can put forwards their ideas effectively. (Organizational Culture at DreamWorks Animation, 2013)
DWA also sends its managers to ‘The Center for Creative Leadership’ where the managers are taught creative ways to lead and motivate the subordinates.
All the three examples show that DWA gives great importance to train and develop its employees. There are 4 Need based motivational theories that explain how training and development leads to growth and in turn increases motivation in employees.
According to Claytons Alderfer’s ERG Theory, Existence needs, Relatedness needs, along with Growth Needs motivates employees. Growth Needs are desires for continued personal growth and development. (Bien et al., 2013.)
David McClelland’s Acquired Needs Theory states that Need for Achievement, which is the desire to do work or task in a better manner, solve problems and master complex tasks, acts as a motivational factor for employees. (Bien et al., 2013.) By training and developing, employees at DWA would be able to perform the hard task smoothly. This gives them the sense of achievement and they are motivated as their Need for Achievement is satisfied.
According to the Needs Model developed by Paul Lawrence and Nitin Nohira, satisfying four needs can motivate the employees to perform better. One of those four needs is Need to Comprehend. Need to Comprehend states that giving sense of importance and opportunities to learn to the employees motivates them. (Bien et al., 2013.) DWA, by training its employees, make its employees feel important as well as make them learn new skills.
Two-Factor Theory also mentions Advancement and Growth as Motivator Factors. Theory states that presence Motivator Factors are important for any employee to be motivated. (Bien et al., 2013.) With training and development, DWA provides its employees to Advance and Grow.

4) Transparency and Trust:
DWA gives importance to transparency across different department and hierarchy. DWA boasts the culture to be against layoffs. It proves it by continuous training and development of existing employees and also by not laying-off employees at the time of recession. This has helps employees to develop a strong trust in the organization.
Dan Satterthwaite speaks about transparency and trust:
“Transparency in leadership isn’t about cheerleading. It’s about the whole truth and really exploring everything that is going on… It forces a kind of introspection [that] had proven invaluable because it breeds transparency and breeds trust, which helps develop managers.” (Building Trust in Business 2012, 2012)
“As the size of [our] workforce has grown, the capacity for the studio has grown and the complexity of the work has grown. . . Trust has become even more integral to what we do, and we’ve developed internal transparency to help foster this.” (Building Trust in Business 2012, 2012)
All the talking about trust and transparency done by top executives is also backed by sayings from the employees:
“Since I started here, I have seen everyone truly believe in each other. That is the reason why we appear in the ‘Top 100 Companies to Work For’. It’s not because of the facilities, it’s not because of the perks; it’s because of the people” (Organizational Culture at DreamWorks Animation, 2013)
Another employee says, “Our leaders were not afraid to talk about what’s going on in the company and country and how it affects them” (Organizational Culture at DreamWorks Animation, 2013)
Because of this transparency and trust that is evident across the whole organization, employees develop positive perception about the organization and feel one with the organization. They are more dedicated to the organization and have no fear of being exploited or cheated.
One of needs of Emotional Drives or Needs Model is the Need to Defend. Need to Defend states that employees need to know the basis on which the decisions are made. They need to know the information that is related to the organization. If there is transparency within the organization, employees build confidence and trust in organization. This acts as a motivational factor for the employee. (Bien et al., 2013.)
Transparency and exchange of information enables employees to know the basis of decision taken related to oneself as well as all the other employees. This allows the employees to perceive the organization as just at Organizational Justice. Organizational Justice concerns how fair and equitable people view workplace practices and outcomes. (Bien et al., 2013.)

5) Collaboration and Communication:
Collaboration is one of the most integral parts for any organization. May it be a small sized business or a multi-billion company, collaboration and effective communication is very essential in the company. It is very important as it synchronizes the goals of organization with goals of departments and individual goals, as well.
DWA realizes the importance of collaboration and communication, and has taken many steps from designing the office of the studio to designing the teams to promote to promote the same.
All the employees who worked in the 14 different departments of the organization were encouraged to contribute to ideas and movies. This enabled open communication not only among the employees but also between different departments. Ideas that were not only related to movies, but also related to social media, business concept, software, marketing, etc were put forward. (Organizational Culture at DreamWorks Animation, 2013)
Satterthwaite says, “Collaboration goes on between people who spend most of their days behind a computer. Yet 400 to 500 people need to feel constantly connected to the movie and the whole. This takes employee engagement to a new level, and it’s not possible without an environment where trust and respect is strong” (DreamWorks Fosters Creativity, Collaboration and Engagement. July, 2012)
DWA started an initiative called ‘Postmortem’, a platform for the employees to discuss their failure and success stories. Employees of all hierarchies took part in Postmortem. Even the Mr. Katzenberg took an active part and shared company information, errors identifies during mid-production reviews, changes needed in marketing, etc. (Organizational Culture at DreamWorks Animation, 2013)
The importance of collaborating with other employees of the organization is one of the most important factors in motivating the employees. It is so important that all the Need Based Motivational Theories mention it.
Social Needs mentioned in Abraham Maslow’s Hierarchy of Needs Theory, Relatedness Needs in Clayton Alderfer’s ERG Theory, Need for Affection in David McClelland’s Acquired Needs Theory, and Need to Bond in Paul Lawrence and Nitin Nohria’s Emotional Drives, all mention the same need that motivates a person. The need to socialize, have strong bond, and good interpersonal relationship with other people. (Bien et al., 2013.)
Not only the Collaboration and Communication enable employees to develop good relations with other, but also strengthens their trust in organization. For example, a person stands by side of particular group he is associated with in time of crisis. The same way, when the whole organization develops a strong bond, it grows from strength to strength.
The trust is also developed because of the transparency that gets developed with high inter-departmental and inter-hierarchical communication. People get to know that the basis of decision taken regarding each employee is the same.

Problems:
While the company hardly had any hiccups in its past history of almost ten years, it experienced some rough patch in year 2012. The movie ‘Rise of the Guardians’ performed poorly. DWA wrote off approximately $87 million for poor performance of the movie. For year 2012, it reported revenues of $749 million and a loss of $36.4 million. It was company’s first loss in nine years. (DreamWorks Animation Takes $87 Million Write-down for ‘Rise of the Guardians’, 2013)
Because of this, Mr. Katzenberg is revising the company’s policy of no layoffs. He says, “One of our primary goals over the coming months will be to meaningfully reduce our overall cost structure so that out business can perform at the best possible margins even when out output levels fluctuate as it is doing in 2013. This means that many valuable members of the DreamWorks Animation family will be leaving the company within the year.” (DreamWorks Animation reports dismal fourth quarter, as expected. February 27, 2013)
This would prove to be a big set back to the company. This decision destroys the strong culture that was built over the years. There would be fear and distrust in employees’ mind. This would greatly affect the working efficiency of the employees.
Not only this, but the competitors might also employ the employees that would be laid-off by DWA. This would prove to be a big set back for DWA.

Suggestions:
As discussed earlier, the culture and the policies of DWA hardly have any flaws in it. This can be noticed as DWA featured in the list of 100 Best Companies to Work For, for five consecutive years. Though, because of the announcement of layoffs by Mr. Katzenberg, the company that didn’t not feature in the same list for year 2014. As the strongly built trust and bond is shaken up, it would want to get back the same culture and trust.

1) Firstly, DWA should offer its selected employees Voluntary Layoff. This would enable the company to maintain its culture and trust of the employees. Even after Voluntary Layoff if DWA needs to downsize, it should offer the selected employees to work in its international offices, i.e. in India and China, at a promoted position. The company should layoff the newly recruited employees of India and China as the offices wouldn’t have the culture and bond that is as strong as the culture and bond in Glendale, CA and Redwood, CA offices.

2) Expanding to different locations weakens the economies of sale of any organization. To operate in this cutthroat competition, it is very important to have economies of scale. Second suggestion could be to shut the operations in the foreign countries and concentrate on the studios in Glendale, CA and Redwood, CA. Shutting down an international office would greatly improve their financial efficiency without affecting the culture of its headquarters or the main office. It is important to have sense of continuity and security for employees to perform optimally during the time of crisis.

Conclusion:
As we can see, the best strategy for any company to prosper is to keep its employees happy and motivated. An employee-centric organizational culture has enabled DWA to be at the pinnacle of the animation industry in short duration of nine years after its incorporation. Even though it has competitors like Walt Disney and Pixar, DWA was able to outperform the giants only by implementing simple strategy of building the organization culture around its employees and giving them utmost care in order to get the best out of them.

Not only DWA, but also other companies like Google, Zappos, which are incorporated in recent past are able to attain great success because of employee-centric organizational culture which promotes autonomy, and effective communication across the whole organization.
References:
1) Our History. (2010). In Dreamworksstudios. Retrieved May 3, 2014, from http://www.dreamworksstudios.com/about/history
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4) 100 Best Companies to Work For (2011, 2012, 2013). In Fortune. Retrieved May 3, 2014, from http://money.cnn.com/magazines/fortune/best-companies/
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10) Atkins, A., Wiete, A. K. (2012) Building Trust in Business 2012. Interaction Associates and Human Capital Institute. In Interactionassociates. Retrieved May 3, 2014, from http://interactionassociates.com/sites/default/files/research_items/2012%20IA%20Building%20Trust_Report_0.pdf
11) Reddy, B., Perepu, I. (2013) Organizational Culture at DreamWorks Animation. IBS No. 413-127-1. Hyderabad, AP: IBS Center for Management Research.
12) DreamWorks Fosters Creativity, Collaboration and Engagement. (July 7, 2012). In Shrm. Retrieved May 4, 2014, from http://www.shrm.org/publications/hrnews/pages/dreamworks.aspx
13) DreamWorks Animation Takes $87 Million Write-down for ‘Rise of the Guardians’. (February 26, 2013). In Variety. Retrieved May 4, 2014, from http://variety.com/2013/film/news/dreamworks-animation-takes-87-million-write-down-for-rise-of-the-guardians-819555/
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