Copyright © 2016 McGraw-Hill Education (Australia) Pty Ltd McShane, Olekalns, Newman, Travaglione, Organisational Behaviour, 5e 1 CASE STUDY 05 LEADERSHIP, CULTURAL AND PERFORMANCE CHANGE AT MEATPACK BY WILLIAM S. HARVEY, UNIVERSITY OF EXETER, UK Context MeatPack is a family-owned food-processing business based in Sydney, Australia. The company, which has over 27 years' experience in meat products, fresh soups and prepared meals, has processing plants in New South Wales and Queensland. Its customers are the major retail chains and food-service companies in Australia and abroad. MeatPack is led by the founder and CEO, Derek Bison, who is the fourth generation of his family to work in the meat industry. In 2013, the company was performing well, with group sales of over AUD$300 million. One of the strategic goals MeatPack set in 2002 was to become a 1 billion dollar company by 2020. However, in order to meet these targets, the company is currently dealing with two major sets of changes: senior leadership changes and cultural and performance changes. Senior leadership changes Over the past two years, Bison has been keen to develop the leadership competencies of his senior strategy team. He feels that there are a number of ways in which his leaders could develop further and he recognises that he could have helped with this more in the past. He describes himself, for example, as 'interfering, visionary, driven, competitive, obsessive, never satisfied and restless'. With a view to changing the mindset and behaviours of his senior strategy team, Bison started working with an executive coaching and senior leadership development company. A number of his team members said that they were gaining a lot of insights from this exposure. Initially, Bison was very enthusiastic about this, too, but in the past year he has stopped his own direct involvement in the coaching, although the senior strategy team continue to be involved. Influenced by the activities of a respected business colleague and personal friend, BisonCopyright © 2016 McGraw-Hill Education (Australia) Pty Ltd McShane, Olekalns, Newman, Travaglione, Organisational Behaviour, 5e 2 has introduced the Human Synergistics Circumplex to MeatPack. This outlines 12 behaviours into three colours: red (aggressive/defensive), green (passive/defensive) and blue (constructive). Bison found that the organisational culture of MeatPack was red and he recognised that it would need to switch to blue if his growth plans were to be realised. He understood that MeatPack would need to shift its structure from a hierarchical organisation to a more horizontal organisation, with front-line workers having greater responsibility and accountability for their performance (Stayer, 1990). Underpinning this transition have been the following: a number of changes to the company's human resources set-up; a company-wide leadership development program; and a coaching consultation for members of the senior strategy team. Bison feels that these have had a positive impact on members of his senior strategy team but confesses that he himself has struggled with this transition. He finds it difficult, for example, not to intervene, jump in or direct others when he feels that sufficient progress is not being made or when decisions are not being taken expediently. There has generally been a positive dynamic in the senior strategy team, which is composed of the CEO, COO, CFO, head of People, head of Sales and head of Business Development. Bison has fostered an open dialogue with his team and it is clear that members are encouraged to speak frankly with him and each other, both on a one-on-one basis as well as during meetings. There has, however, been some uncertainty about the composition of the senior strategy team, with one attendee at a strategy meeting being unsure of whether he was officially part of the senior strategy team. This led to subsequent discussion among the group about the matter, as well as over whether another member, who was not present at this point, should be part of the team. There is also a separate senior leadership team, which includes all of the senior strategy team members above, plus the senior line managers. There has been some discussion about the exact purpose of both of these teams. Because Bison is one of the founders of the company and the current CEO, some members of the senior strategy team are a little reluctant to question his decisions, despite Bison actively encouraging an open dialogue. The CFO wonders whether the board should hold Bison more accountable and whether Bison should hold the senior strategy team more accountable. The COO expressed concern that MeatPack has lost some of its senior leaders within the past few years. This has caused some anxiety for the followingCopyright © 2016 McGraw-Hill Education (Australia) Pty Ltd McShane, Olekalns, Newman, Travaglione, Organisational Behaviour, 5e 3 reasons: they were direct reports to Bison; their personalities were in conflict; Bison had involvement in their area of operation; they were making a positive impact before they left; and relationships with some suppliers and customers have been lost as a result, causing business to move to a competitor. The senior strategy team was about to embark upon some major structural changes— with the arrival of a new CEO of the soups and meals business at the end of 2013, and the existing COO of the meat division replacing Bison as the CEO of meat. Bison said that in the short term he saw himself moving to group CEO alongside these two CEOs. In the long term, he envisioned that he would move from group CEO to executive chairman, with both CEOs reporting to him. In his own words, 'I'm not really a big people person and the people thing will go to the CEOs. I want CEOs to be CEOs.' In five to 10 years, Bison's vision is to move from executive chairman to chairman. When this was broached in one of the strategy meetings, there was some heated discussion about who would be reporting to whom in the new structure. For example, the CFO was concerned about whether benefits would be derived if MeatPack decentralised the functions of support teams such as Finance and IT. The head of Business Development asked how the new structure was different from the old structure, and it was debated what, if anything, the other employees should be told before the company's annual meeting the following week. It was decided by an independent chair of the meeting that discussions would be paused and discussed further at a later date. Some members were clearly frustrated that the issue was not resolved during the meeting. Cultural and performance changes In the past two years, MeatPack has introduced an enterprise resource planning (ERP) initiative, which seeks to integrate multiple divisions of the company such as finance, production, investment and management. At the heart of this system is the desire to be more structured and efficient in ensuring that each line is hitting and exceeding its targets. Part of this system is also about encouraging managers to change their methods of communication. In the past, dominating, shouting and other aggressive forms of confrontation were quite common practice. There was a focus on making things happen instead of understanding how things worked and why they were not working. As with anyCopyright © 2016 McGraw-Hill Education (Australia) Pty Ltd McShane, Olekalns, Newman, Travaglione, Organisational Behaviour, 5e 4 results-driven organisation, this created a culture with a top-down environment for the managers, in which targets had to be reached. Bison has been strongly influenced by his executive training at the Harvard Business School and one of his major goals at MeatPack has been to install a flatter structure across the organisation, which empowers managers and supervisors to take on greater responsibility and accountability. For example, he has encouraged line managers to take a more hands-on role in terms of the recruitment of personnel and performance appraisals. In general, there has been an overall drive to get people across the company to lead rather than manage (Kotter, 2001). The CFO and COO both feel that this has been a positive endeavour, but find that this is taking place 'in pockets', and that Bison could lead more by example with respect to the senior strategy team. Bison's aim across the organisation is for there to be six to eight people per report in order to ensure that managers and supervisors have the opportunity to lead and be more clearly accountable. He argues that if he was coming into the company now with no previous ties then he would remove certain people immediately, but he won't do so because he and the team all know these people and there are established relationships and emotional ties, making such decisions significantly more difficult. There is a strong sense of loyalty on the 'floor' and staff turnover is low in an industry that is known to have problems with retention because of the repetitiveness of the work. One interviewee remarked that given that the factory floor is cold and noisy, there is a certain type of person who can work in this environment. Staff are employed almost continuously on the production line, the work is physically demanding and standards are exacting. Despite a diverse array of cultural backgrounds, with employees from multiple countries, there have been few cross-cultural clashes. The majority of the workforce has worked at MeatPack for between six and 10 years, with many others having been at the company for at least 15 years. While this is positive in terms of loyalty, it is also potentially challenging with regard to changing attitudes towards the proposed cultural changes. MeatPack is perceived internally as trustworthy and honest, and employees feel 'safe' because decisions seem to be made with the 'best intentions of the company'. The company has developed quite a collegial and family atmosphere. While there are 'serial complainers', as one employee put it, most are happy in their positions.Copyright © 2016 McGraw-Hill Education (Australia) Pty Ltd McShane, Olekalns, Newman, Travaglione, Organisational Behaviour, 5e 5 Recruitment is often via word of mouth, with many employees coming from the same family group working at the factory. Employees who have moved from MeatPack's competitors have commented on the company being more organised, methodical and collaborative in culture. Bison has made a significant investment in his staff's training, and employees with proven skills and a strong work ethic can move up the company chain quickly. The CFO, for example, started out as the assistant accountant, which indicates that there are good opportunities for talented individuals to develop within the company. Bison has invested in management and team leader development courses, with newly promoted shift leaders being put through a front-line management course. This aims to improve their leadership skills and enable them to better manage and lead their teams. The development of a line focus has created a culture of accountability for each position, which has allowed line staff to have a hand in developing the efficiency of the company front line, and this has made them feel a valued part of the team. One manager remarked that without his team he would not be in the job. Since the start of the cultural change program, there has been a shift from managers 'managing' to 'leading' their teams. In particular, there has been a more systematic process of managers sitting down with employees and talking problems through. There have been some important cultural changes taking place as a result of managers being encouraged to take some time out to 'step back' and reflect on their 'tool box' to address certain situations. Bison has pushed for a focus on the 'Rockefeller Habits'—created by Verne Harnish (2002) and based on the leadership and management principles applied by John D. Rockefeller, business magnate, philanthropist and co-founder of Standard Oil. There are three pillars to the Rockefeller habits: priorities, data and rhythm, and Bison has placed a strong emphasis on MeatPack's strategic goals (priorities), performance feedback (data) and accountability (rhythm). Bison has also invested in the leadership training of his front-line and middle managers, whereby they have developed skills through an external provider on the life cycle of a leader, including attracting, hiring, developing, mentoring and appraising, as well as confronting and removing, where necessary. The feedback from senior managers has been that their managers have appreciated such level of investment in their development.Copyright © 2016 McGraw-Hill Education (Australia) Pty Ltd McShane, Olekalns, Newman, Travaglione, Organisational Behaviour, 5e 6 The managers are generally considered quite young, 'fresh', 'open-minded' and 'close'. Some managers feel that although they are now much better at saying things without offending their teams, jobs are often left incomplete because what people say is different from what they do. There are 17 line managers who plan for the following day's production and there is general concern that while it is good practice to codify this on a large whiteboard next to the factory floor, there are too many managers going over the data and not enough people on the lines to deliver the targets. The vision is that the targets, which are manually inserted on the whiteboard, will eventually be inserted electronically. A major challenge with regard to reaching daily targets stems from the difference between the day and afternoon shifts. The day shift starts at 5:30 am and finishes at 2:30 pm; the afternoon shift starts at 2:30 pm and finishes at midnight. Bison has encouraged 'huddles' at the beginning of and between the shifts—at these, workers can discuss what the day shifts have done and what the afternoon shifts need to do. The cultural norms of the shifts are significantly different. The day shift is described as taking a 'gung-ho' approach, which leads to higher yields. This is partly explained by the day shift choosing the lines that make it 'easier' to hit their targets. The afternoon shift is under greater pressure because of specific cut-off times at 3 and 3:30 pm, when lorries arrive to pick up particular products for delivery to the supermarkets. In short, there are differences in priority—with the day shift focusing on maximising yields, and the afternoon shift on being ready for timesensitive lorry pick-ups. In general, there is growing pressure for managers and workers to increase their line's productivity. Despite this, yields have increased and there has not been any loss time injury (LTI) in the past year. Sources: V. Harnish, Mastering the Rockefeller Habits. What You Must Do to Increase the Value of Your Growing Firm (Ashburn, Virginia: Gazelles, 2002) Human Synergistics International, 'Our Measurement Model—The Circumplex' (2010), www.human-synergistics.com.au/TransformingCultureAndLeadership/Circumplex.aspx, accessed 17 February 2015 J. P. Kotter, 'What Leaders Really Do', Harvard Business Review 79, no. 11 (2001): 85–98Copyright © 2016 McGraw-Hill Education (Australia) Pty Ltd McShane, Olekalns, Newman, Travaglione, Organisational Behaviour, 5e 7 R. Stayer, 'How I Learned to Let My Workers Lead', Harvard Business Review (November 1990): 66–83.