Posted by Walter Rach on Tue, Sep 07, 2010 @ 01:53 PM
Thank you for joining me today as we take a brief departure from happenings in the food and beverage industry to examine the human elements I’ve seen cropping up recently in searches. During the course of a typical search, I hear the words ‘match’ and ‘fit’ used quite often. Those terms are used by clients in reference to the position available or the company’s culture. I also hear the terminology from candidates as they speak about career progression and cultural fit. It is important to pay attention to those words – not only to create the best pairing possible – but because it points to the human elements that are always in play during a search.
Recently I was reminded of the importance of match and fit while conducting a search. How a career change affects the livelihood of people and their families is a consideration that may become even more pronounced in times of economic uncertainty. Clients (somewhat accurately) see this as a buyer’s market and therefore feel they can be very exacting in their requirements. They can be picky! They want the ultimate, perfect background and pedigree. They seek people – sometimes to the chagrin of the public – as CNN reported that are currently employed. The idea is this – a candidate will be truly motivated, for the right reasons, to consider the opportunity.
On the other hand, for many candidates, their search may not exclusively be about career advancement. A recent article published in Harvard Business Review magazine, How Will You Measure Your Life? examines the shifting attitudes of the nation’s top business school students. The article points out that after the economy went into a tailspin many workers have spent time recalibrating their worldview and definition of success. News flash – the new outlook favors happiness over a big paycheck.
More than that, recently I’ve encountered top candidates declining to make a career change for various qualitative reasons. They are uncertain of how the new opportunity will affect their family and work/life balance. If relocation is part of the deal, they question if they will be able to sell their current home in today’s dreadful housing market. They deliberate over leaving current employment, which in their mind is a sure thing, when the overall economy is a question mark. These are the human elements of search I run up against most often.
Sometimes it is easy to forget that this business deals with the lives of people and those closest to them. A perfect candidate or career opportunity can be overwhelmed by these intangible factors. Search is not just a process-oriented, black and white business. Human elements add a lot of gray to the picture. While this makes the search business challenging, it is also ultimately very rewarding when the right match and fit is found.
Posted by Walter Rach on Tue, Aug 31, 2010 @ 12:00 PM
Our last two conversations examined the development of healthier food products. I gave two actions as drivers of this trend – consumer preferences and increased legislation in the food and beverage industry. For companies, abiding by regulations can have a great impact on strategy and performance. With that in mind, I’d like to draw your attention to an issue that’s been front and center in the news recently: the salmonella egg fiasco.
Food safety recalls in particular can affect a company’s performance and future in a major way. The recent salmonella egg recall now has a staple of American meals going through a bit of an image crisis. The crisis not only hurts in-store sales, it also has eateries across the country placing their egg supplier in the hot seat. Plus this time Congress has taken note and may enact new regulatory legislation as a response.
It brings to mind the peanut recall of 2009 during which more than 120 people were sickened or died from a Salmonella outbreak. The vast majority of nut products – including foods like ice cream and peanut butter containing the legume – were not made with a product ultimately deemed dangerous. The scare did, however, affect the entire category until the problem was identified. Fast-forward to 2010 and this month a $12 million peanut settlement was recommended by a judge ruling against the Peanut Corporation of America, which produced the tainted product.
For those reasons, food safety issues and recalls have made traceability and sustainability absolutely critical for major customers and their suppliers. This filters down to food and beverage manufacturers who insist on the same from their ingredient suppliers and agricultural sources. Companies, like McDonald's, that are strong in the aforementioned areas have a definite competitive advantage – no one wants to risk food safety.
Many companies survive recalls, but they had better be prepared for a crisis ahead of time. Regarding talent, have executives with uncompromising integrity on food safety in place. You will need a leader that can step up in a time of crisis to ensure the unfortunate occurrence of a recall won’t completely sink a company. Also create an “action plan” with specific steps to take, firm policies, and precise procedures formulated in advance. You don’t want to have to wing it. By implementing traceability practices, recruiting leadership able to deal with a large-scale crisis, and formulating a crisis plan, your company will be well-positioned to deal with a recall.
Posted by Walter Rach on Tue, Aug 24, 2010 @ 12:00 PM
Last week’s blog advised those in the food and beverage industry to continue full-speed ahead with developing healthier food products, because that is what consumers prefer. There is another reason to stay the course – you might have to.
Read today’s headlines and there are prominent stories on legislative moves that aim to stipulate healthier food and beverage practices. Noteworthy state-level food and beverage legislation in recent years often stems from heavy hitting politicians. Mayor Bloomberg enacted an all-trans fats ban in New York City, as well as menu-legislation , and attempted to pass a tax on sugary drinks (it failed). California followed Bloomberg’s lead and passed legislation dictating menu-labeling. The law – signed by Gov. Arnold Schwarzenegger – requires restaurant chains with more than 20 locations to print nutritional information like calories and grams of saturated fat on menus.
Now in the senate, is a bill under consideration that will create new standards for all foods in schools. Michelle Obama is throwing her support behind the bill, which includes stipulations on available vending machine items. Passage of the bill is only the first step and many particulars of the $4.5 billion expenditure will be determined at a later date by the Agriculture Department. While it is debatable as to whether government should regulate and mandate healthier eating, the fact remains that they do so, and food and beverage companies must deal with that.
What you may ask does this mean for food and beverage companies? Possibly it will mean many changes if product offerings are not deemed to be in-line with legislation. In the above scenario it is likely that a company currently selling a large amount to schools may be penalized if they do not drastically alter their products. For that reason alone it is important to continue developing healthier foods and to be in tune with how winds are blowing from D.C. and state capitols. Particularly from a talent standpoint, companies need to employ people that are knowledgeable about government regulations and understand how to lobby effectively. As legislation of food and beverage companies becomes more prevalent, I think we will see more companies strengthening area of nutrition focus within their organizations.
For example, last year I completed a search for Bunge Ltd to identify a Global Principal Nutritionist that addressed this very talent need. The newly-created position was designed to support Bunge's food businesses around the world. The purpose was to identify future nutritional trends, industry developments, and to monitor emerging science. The end goal was to implement these findings into existing and future R & D product development programs for the business units. This is a great example of what a company can do to stay ahead of the curve. Anticipating legislation is critical for those in the food and beverage industry, and those that are best prepared will have an invaluable competitive advantage.
Whether we like it or not, legislation is a fact of life and companies that don’t get with it may be left on the sidelines.
Posted by Walter Rach on Tue, Aug 17, 2010 @ 12:00 PM
Look at any trend forecast for the food and beverage industry and you find an emphasis on health and wellness. With age conscious Americans seeking longer life spans – and a higher quality of life in those later years – marketers have rushed to provide healthier product offerings. The push towards widespread availability of better products should lead to smarter nutritional choices, which means a fitter population. With the abundance of healthy products obesity rates are surely decreasing, right?
Well … no … not really.
Recent articles in Food Business News* and the Wall Street Journal** report state-by-state rankings of obesity and the picture isn’t pretty. The statistics, taken from a Center for Disease Control report, show that in 2009 at least 30% of adults were obese in nine states. By contrast, no states had such high rates of obesity in 2000.
The study found that Colorado and Washington, D.C., fared best with obesity rates below 20%. The worst state rankings were found in the southeast with Mississippi in the lead, having 34% of its adults categorized as obese. Those of us in the food and beverage industry must ask: What gives? Should food and beverage companies continue to focus on developing healthier products, or is this simply a smoke and mirrors marketing ploy.
In my opinion, companies should definitely continue offering healthier products. Clearly, people wish to make smarter dietary choices, but sometimes their lifestyles get in the way. Realistically, when you take into consideration the less active and more sedentary lifestyles people lead today, that may be as large a problem as poor dietary decisions. Even if people do it a little at a time – and the effort is not always successful – product offerings in the health and wellness category should not be scaled back.
In fact, food and beverage manufacturers should continue full-speed ahead with development of healthier products. The trend is here to stay and will almost certainly be a growth area despite the current rise in obesity rates. This may come under increased scrutiny, or even become part of future legislation, particularly as children adopt the poor eating habits and less active routines of overweight adults. For example, just this week San Francisco lawmakers proposed a bill to limit toys in kids’ meals****. With many people reaching the boiling point on this hot issue, I hope you will join me next week to review new proposed legislation and the implications for the food and beverage industry.
* http://www.foodbusinessnews.net/News/News%20Home/Consumer%20Trends/2010/8/US%20obesity%20rates%20continue%20to%20rise.aspx?NewsLetter=true
**
http://online.wsj.com/article_email/SB10001424052748704499604575407480181932468-lMyQjAxMTAwMDAwNDEwNDQyWj.html
***
http://www.cdc.gov/vitalsigns/AdultObesity/StateInfo-large.html#AdultObesity
****
http://www.usatoday.com/money/industries/food/2010-08-13-kidsmeals13_ST_N.htm
Posted by Walter Rach on Tue, Aug 10, 2010 @ 01:36 PM
When an acquisition takes place there is often an increased focus on what will happen to hiring. Commonly, people involved in an acquisition want to know what will take place after the deal goes down. The answer is: it depends. After the acquisition there are four scenarios I’ve witnessed most often, which all have different hiring implications.
Acquirer Integrates Company Totally
Typically this outcome is seen when the two companies involved in the M & A are quite similar. The hiring challenge here is widespread duplication, which results in two of everything from executives to receptionists. To correct the surplus, downsizing is generally used. Most often it is the talent from the acquired company that is sent packing. There should be no shame, however, in being part of downsizing due to an acquisition. In fact, some view it as an opportunity to find very good talent that is otherwise unavailable.
Acquired Company Runs Autonomously
It is not mandatory that all acquisitions negatively affect hiring. A current example of this mutually beneficial scenario is the acquisition of the American Italian Pasta Company by Ralcorp. While some backroom functions like accounting or IT may be combined, it will probably be business as usual for the acquired management team. From a hiring perspective not much will change during this acquisition. Benefits of this move are a stronger, larger business with existing, in-house expertise that operates autonomously.
Acquired Company Retains Existing Talent
In this instance, the acquired company values the talent of the company it bought and seeks to retain that talent. Beware though that there are two sticking points with this scenario. First corporate culture must be considered because it will come into play. Recall last week’s blog explored corporate culture and the fallout sometimes seen following an acquisition. If the cultural fit is not right, talent will be lost. A second consideration is that the role within the new company may not be viewed as challenging or rewarding enough. If the aforementioned two points are not given careful consideration there may be significant outside hiring with this type of acquisition.
Acquirer Buys Business, Not Management
In this set-up the acquirer likes the business but – for whatever reason – is not happy with the management team. Perhaps the existing company is underperforming and a private equity group negotiates an under value price. In this scenario you may have wholesale changes and there will be much hiring that follows the acquisition. The focus here will be on building a new team that can produce the expected value.
In all of these scenarios companies would be wise to take a step back and evaluate the existing management team. Ask if the team is strong enough to run the company post-acquisition. Consider also whether the team can take the combined company to where it wants to go. For example, if the management team is capable of reaching $150 million, do they have the horsepower to reach $500 million? The complexities and increased scope that results after an acquisition may require a new or enhanced skill set on the part of the executive team. Finally, don’t forget about culture! Be certain there is a game plan in place to cultivate an integrated corporate culture and evaluate all new hires for fit moving forward.
Posted by Walter Rach on Tue, Aug 03, 2010 @ 12:00 PM
During the merger and acquisition process there is much due diligence done on the acquisition target. Analysts pour over the books to determine the value of the acquisition relative to the price. The scale, scope, and fit of the business into the acquiring company are all evaluated ad nauseam. Particularly evolved companies may even look at the strengths of the existing management team, and carefully consider the talent they will try to retain and the talent they will urge to move on.
With all of the deliberation, I believe there is one very important factor most companies overlook during the acquisition process. They often fail to ask this most important question: What will be the culture of the new company? Oftentimes, very little thought goes into integrating the two cultures and what results is akin to mixing oil with water. Too frequently, flummoxed deal makers are left scratching their heads and wondering where they went wrong.
Consider also the affect company culture has on making the existing leaders successful. No one is an island, and environmental factors certainly contribute significantly to an individual’s ability to flourish and succeed in the workplace. It is a false assumption to believe that those same people will perform in the same way in a very different cultural environment. In fact, it has been shown repeatedly that the main reason people leave after an acquisition is because of a cultural misfit. Deal makers take heed, if it is important to retain existing talent, then more emphasis needs to be placed on developing a culture that is conducive to both the acquirer and the acquired.
It comes down to this - if you value the talent of the acquired company - don’t try to ram them into a very different culture. After witnessing many cultural catastrophes, I urge executives to treat this relatively qualitative criterion as equally important, if not more so, than the quantitative indicators. Failed attempts at folding people into a new culture will undoubtedly encourage an increased importance being placed upon defining and constructing the post-acquisition culture.
And remember – if the cultures are just too dissimilar – that is as good a reason to walk away as any other metrics used in evaluating the deal. Join me next week as we take a look at what happens to hiring after an acquisition takes place.
Posted by Walter Rach on Tue, Jul 27, 2010 @ 12:00 PM
In my many years in this business I’ve learned a very important rule: You never know what to expect when performing a search. This year I was working very closely with the American Italian Pasta Company when it was announced that a large, primarily private label manufacturer would acquire the pasta maker. Many of you are probably familiar with the deal where Ralcorp Holdings has agreed to purchase AIPC for around $1.2 billion – right in the middle of my search! It got me thinking about the increased merger and acquisition activity in the food and beverage industry this year, which has actually been a little surprising considering how quiet the market was only twelve months ago.
There are several lucrative, stand-out deals – Kraft and Cadbury; Diamond and Kettle; and GS Capital and Michael Foods– all come to my mind immediately. There are also significant deals on the horizon. From the Cott Beverage and Cliffstar Corporation business combination, to the agreed upon merger between Snyder’s of Hanover and Lance, to Sara Lee seeking a buyer for its bread unit, there are many more deals to come this year. All of this activity follows a conservative '09 where many companies were sitting on the sidelines waiting it out. Looking at the big picture, food and beverage has fared far better during the economic downturn than other industries. What are the reasons for this phenomenon and why are we seeing an increase in deals?
First, the food and beverage industry – unlike, say, housing – is somewhat insulated from shifts in the overall economy. Consider also that, in general, the economy is improving (albeit slowly) and that means easier access to capital funding, and therefore more deals are made. Plus, there is a psychological component in play as companies feel the need to “do something” to stimulate growth, and increase profitability; oftentimes this is accomplished by getting into a new or complimentary businesses, exploring alternative channels, or seeking international expansion through M&A activities.
There are, however, caveats to the M&A panacea. In troubled economic times, it is critical to make the right acquisition because there is less room for error. Companies invest countless hours in due diligence and sometimes overlook the effect an acquisition will have on corporate culture and hiring. To illustrate my point, recent news articles report that five senior executives from Cadbury are leaving Kraft after the merger. The biggest loss is Mark Reckitt, Cadbury’s chief strategy officer, who steps down at the end of this week.
A bad acquisition in challenging times can sink a company faster than you can spell let’s make a deal. For that reason, we will allot the next two blogs to examining the impact of acquisitions on corporate culture and hiring.
Posted by Walter Rach on Tue, Jul 20, 2010 @ 12:00 PM
Welcome to my new blog! I have spent my entire career in the Food and Beverage Industry, first in Sales with the Carnation Company followed by over 25 years as the leader of the Food and Beverage executive search practice here at Cook Associates. Food and Beverage has been an interesting, dynamic and ever-changing place to be over this time period and the future no doubt will continue to be filled with surprising and exciting happenings.
The purpose of this blog will be to respond to topical issues occurring in Food and Beverage and provide my opinion regarding them. Since my involvement in the Industry is focused on executive search, I anticipate that my commentary will lean primarily towards related issues, such as hiring, organizational development and talent for the Food and Beverage Industry.
I would also hope to use this blog as a forum for reader comments as well and welcome your thoughts and opinions on the issues raised. Please join the conversation and post your responses. You can also contact me via email at wrach@cookassociates.com
My blog will appear weekly on Tuesdays.
Best regards,
Walter Rach