The Executive Newsletter of TheOfficialBoard

By Michael Creamer, Vice President Human Resources, Cott

Is it a new concept? Not really. Over the years many companies have wanted their employees to think and act as owners. Some are much more successful than others.

What strategies have been tried? Granting options, Restricted Stocks and Long Term Incentives. In many cases, these strategies seemed to work. But was it because of the ownership feeling or was it due to the general economy and growth of the stock market?

There’s a difference between an owner and an investor. Investors generally have a short- or medium-term time horizon, and they’re thinking strictly in dollar terms. By contrast, owners are in for the long haul, and they have an emotional attachment to the company that goes beyond dollars. Equity type incentive plans can be a good idea, but the only way to get people to think like owners is to elicit real ownership behaviors.

At Cott we started focusing on this by setting objectives for employees that directly related back to business objectives. At the time we did this, it seemed like the right thing to do.

As we implemented and developed scorecards to measure the objectives, we realized we had created a monster. We assumed that everyone could attach a dollar amount that could be measured as their contribution.

We decided that simple is better and began to focus on 4 things all employees can wrap their hands around as owners. The vision we set out was “The 4c’s” : Cash, Capex, Customers, Cost

By focusing on these, it is easier to emphasize thinking and acting like owners. It is easier to talk about all 4 C’s when your anchor is Cash. If you have a lot of cash your focus is investing it wisely. If you don’t have a lot of cash you’ll need to watch what you spend, affecting costs. Having cash allows you to invest in Capex while having low levels of cash makes you think very hard about Capex and how quickly will you get your money back.

How do our people do this in their daily tasks?

• For our line operators and mechanics, line efficiency is key. The more production without waste means higher levels of efficiency and the very clear goal of being nominated as the plant of the year.
• Our accountants now provide concrete suggestions on how to better focus expenses without affecting worker productivity.
• Salespeople now focus on long term solutions, partnering with our retailers to bring quality products and efficiencies for Cott.
• The procurement team’s everyday focus is looking at ways to efficiently partner with suppliers to creatively reduce costs.

We have had good success with our 4c’s. People talk about them and embrace them. Of course not everyone agrees all the time, but people have a theme to latch onto as they begin to think like owners. It is like the owner of a new car; you wash it, wax it and look for scratches.

Michael Creamer is Head of Human Resources at Cott. Cott is one of the world’s larger beverage companies supplying over 200 retailers in the United States, Canada, the United Kingdom and Mexico through 20 manufacturing facilities.

By Catherine Blondel

We know the song:“I’ve got it” . It is exactly what any newly appointed executive wants to say. Finally, after years of hard work: I am, I exist, I made it!

But reality soon dispels the fiction. Nothing seems really new. Since the times of Plato, we know that power corrupts, and we are just beginning to understand what that means for large corporations.

The current crisis has shed light on the legal transgressions of a few corporate leaders. Every leader is beginning to understand that everyone has been tarred by the same brush. Power may corrupt but also corrode those who try to exercise it.

To the loneliness of today’s executive, we can also add the loss of the authority. Leaders can no more claim the legacy of experience and legitimacy based on skills. Their authority is continually questioned by the shareholders, customers, employees and suppliers.

Becoming a leader and remaining one, while the magnitude and duration of the economic crisis are still being debated, will require exectuives to endure the loss of different aspects.

• The first aspect, less prominent in the United States than it is in Europe or Asia, is the loss of statutory elements such as the attended business schools or the number of secretaries.

• The second aspect is the loss of competence (Yes, you read correctly). The crisis, beyond displaying the golden parachutes and the bonuses, has also highlighted the lack of common sense, the silliness, the incompetence and the powerlessness of a few executives.

• The combination of the two clearly has deleterious effects on everyone including the competent leaders. The third aspect, finally, is the loss of self-confidence, which is certainly the most corrosive.

Of course, those loss of orientation or loss of competence would deserve more developments about understanding whether they are simply the expansion of the democratic principles to the corporate world. Companies have for a long time escaped to the democracy focusing almost only on their shareholders.

The current global crisis has acted as a particle accelerator, revealing that “the Emperor is naked” and eroding confidence in executives. Each executive might first acknowledge those losses as he would acknowledge a loss on his company financial statement. He can also “sing the blues” and manage what makes every transaction possible: trust.

Its loss is not forever. Executives can patiently rebuild reputations and stakeholder confidence. You may have lost it temporarily but you can find it again in all ages!

Catherine Blondel is an Executive Coach, a psychoanalyst, and essayist. She has published several books including Quand le travail fait symptôme in January 2009.