I was reading an article written in November 2010 by Louise Lee which was a summary of a speech given by Mr. Carlos Brito, the CEO of AB Inbev (which owns Anheuser-Busch). Basically, in his speech given before a group at the Stanford Graduate School of Business he talked about his austere approach to managing AB Inbev. Mr. Brito has a new approach to the word “fun” as part of a job. “I think fun’s too weak… I like people at the company to have fun, sure, plus passion, plus commitment, plus energy, plus lots of other things. Fun is too weak if you want to be best at what we do,” said Brito. Well, should employees have the traditional idea of “fun” at work? Is it fun be austere?
The tech sector is full of stories about providing free meals for employees in nice on campus dining facilities, workplace massages, employee off-site meetings to “connect with each other”, and even one large internet company opened a woodworking shop on their campus for employees to make things. Some HR departments have designated people to manage fun activities for employee groups. “Brito’s message: Regardless of industry, the success of a corporation hinges in large part on hiring high-performing individuals, bringing passion and commitment to the job, and on building a company culture that keeps them,” said Lee. Obviously, lavish and even some inexpensive perks is not how to build a team and create employee value, according to Brito.
Some of the corporate culture issues that came up when AB InBev acquired the Bud brand were: eliminating corporate jet travel, no private offices for executives (open office concept for all), and no free meals at lunch in local restaurants, no free beer at the in-house bar and certainly no staying at the Four Seasons Hotel on business trips. When he took over Anheuser Busch he instituted a zero based budgeting review process. On example to show the detail at which costs were reviewed, small refrigerators in work spaces were turned off at night to conserve electricity.
Aside from the Silicone Valley approach to team building and employee benefits (which include high salaries), I am aware of one firm that annually promotes a companywide bike trip, with spouse/friend, through wine country with lunch and a bottle of wine from each of the 12 wineries visited. The idea is that these activities build morale, team commitment, eliminate turnover, and attract the best people. But, does this strategy really work, especially in a public company as opposed to a private company?
According to Brito the short answer may be a resounding NO as it relates to his highly successful worldwide company that markets beer.
In reviewing Brito’s comments at the Stanford Graduate School of Business, they probably fell on deaf ears as young people have no experiences and perspectives relative to costs and adding shareholder value. In my college days, as with the Stanford crowd, I too had a utopian view of what to expect in my work life; unlimited expense accounts, company functions, staying a the Hilton Hotels, free health insurance, constant raises, three weeks vacations, and the list goes on. In the real world, post graduation, I soon came to see what it was like when a company was headed for a merger or worst-bankruptcy. Even with all the accouterments of a “fun” corporate life the realities were that the company vanished from the corporate scene. Reality soon set in as time passed.
Again, we come back to the issue: Is it necessary to inundate employees with “soft” benefits to motivate them to excel in their job and perform as part of a team? Inundate no, but some “bennies” have rewards for the bottom line. Still it remains, there is always a little left “in the tank” with any employee and that is why there are incentive programs for customers and employees. The wine country bicycle trip mentioned previously, is a function where management has an uninterrupted time to interface with wives/husbands and significant others about the hard work ahead and in the past and garner support on the home front. Money has been proven NOT to be the “be all/end all” tool to keep performance high and motivate high achievers (known also as Type A’s). Further, there are very few jobs in the world where team support can’t and don’t make projects happen.
Even Mr. Brito poses the question eloquently when he rhetorically asks: What makes a high-achieving corporate culture? Here are his answers. First, a company must hire high-performing individuals; Secondly, bring passion and commitment to the job; and, Third, the corporate culture must be such to keep them. All seem to be givens, right? His premise is that a corporate culture will bring people to the company that can be retained, trained and promoted. Part of his new cultural initiative was to also eliminate tuition re-imbursement and educational aids and 401K type programs.
Part of Mr. Brito’s corporate culture concept is that high-caliber employees will challenge each other and don’t take criticism personally. He goes further. To retain talented employees another cultural trait is an atmosphere where employees are encouraged to speak up. Which is why the open office concept is in place; people are always around each other and learn from hearing other management styles-getting to know people.
In practice his theory is that talented people will demand feedback and candor from their managers, they require praise and are therefore considered high maintenance employees. But, high maintenance employees will define corporate culture based upon meritocracy. “If you can’t please everyone, please the most talented ones,” even if doing so means alienating lower-performers, Brito advises.
My issue with this is some of the same issues with the merit system were put in place by Jack Welsh at GE; you always weed out the lower performers every year and keep back filling. Not much of a team gets built, assuming teams are important to senior management. In the case of GE, middle and senior management could also be forced out due to an inopportune personal conflict with another staff member. Anyway, for many reasons I have never been a fan of this system primarily because I believe team building afford growth, building a culture, recognizing star performers while facilitating proven non-performers to move on.
The Brito System (my name for this management style) is probably not for every industry. I personally do not find it accommodating for differing and strong views, after all we are dealing with different personalities. Further, if a manager accepts the fact that the only reward in an austere work culture is money, what happens when salaries are constrained and the slap on the back with a “you are doing a great job” comment is all that comes the employees’ way? Loosening budget controls is not a good option unless it is across the board and that is an expensive option in an effort to appear fair.
If research is correct, money isn’t everything and eventually people get tired of the rigid and stark envirobnment of a corporate culture and good people will move on to greener pastures. That said, it isn’t long before vendors and customers will say this culture is impacting me negatively. For example, AB InBev told their vendors they would not pay any invoices for at least 120 days-that means vendors must pay for their cost of goods and manufacturing of their finished product in 30 days and then carry a receivable from a $40 billion corporation for 3 to 4 months. Simply stated, there is no free lunch so somebody will pay for this dictate from AB InBev. They may get cooperation for a while but eventually vendors find ways to find other more friendly revenue streams.
Sometime we can be “penny wise and pound foolish,” a British idiom that refers to a focus on minutia and still being foolish in other ways.
Team building provides some penny wise benefits while maximizing the pound return:
· Can be structured to compensate for various corporate cultures.
· Rewards the vendor and customer.
· Develops best practices that are maintainable.
· Encourages peer review and pressures for performance.
· Allow for performance incentives even when promotions or money is not an option.
· Allows for continuity of staffs/teams.
· Adds employee value through cross team development.
· Team building is also effective even in an “open office” environment.
People, cultures, economic conditions, expectations, and competitive forces are a constant change and it will be interesting to see if AB InBev management practices experiences the forces of change.