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MBA Musings: Kraft Heinz must "catch up" to culture trends

Updated: Jun 16, 2019


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"We spend far too much time and energy at work to be miserable and I would rather not work for or with people who put policies or profits over people."

For the last decade, I have been increasingly committed to working at places where either my values aligned with those of the organization or where there was an appetite and sense of readiness for transformation to values that align with mine. To that end, I have searched "best places to work" many times over the years. I am always intrigued by which companies make those lists. Obsessed with inclusion, diversity, culture, people and what makes us all tick, I pore over those employer rankings and ratings, soaking in all of the things that people love about their organizations.


But for the purpose of this assignment, I flipped my research on its head: "worst places to work".


What came up were lists just like the ones that I have loved for so long, only these weren't the model, A+ students, so to speak. These were the alleged ne'er-do-wells and the problem children of the corporate world. I was just as intrigued to read about them, as I believe we learn as much or more from failure as we learn from success. I read dozens of articles and found that Kraft Heinz was on every list. I was not surprised, considering I have read very little in terms of culture specifically or thought leadership in general from their top brass.


Formed in 2015 through a massive, $63 billion merger between Kraft Foods Group and Heinz, the company created the fifth largest food company in the world along with a buzz of optimism and a bright financial outlook (Frost, 2019). They were, after all, a powerhouse packing a portfolio of more than 200 powerful and iconic brands (Kraft Heinz Company, 2019). However, data rich analyses of the company since it's formation point to a key problem: The Culture. One example is Kraft Heinz chose not to publish its turnover rate in the “Recruit, Develop and Align our People” section of its February 2018 report. Another sign that something is amiss is that while they are decidedly selective in their recruiting practices, only 30 percent of MBA interns and other trainees accept offers. Yikes.


The facts point to a culture where leadership - where everything begins and ends - is known to cut costs rather than invest in its people or its products (Raath, 2018). That approach can create a hotbed for bad behavior as people feel pressure to shirk ethics in favor of ensuring the numbers make and keep stakeholders happy and that is precisely what happened at Kraft Heinz (Hirsch, 2019). (I'm looking at you, too, Wells Fargo.)


Under the leadership of former CEO Bernardo Hees, Kraft Heinz lost a significant market share and half its market value in the process. It also lost an opportunity to reap the benefits of what would have been a $143-billion merger with consumer giant Unilever Plc. As they backed away from the bargaining table, Unilever expressed concerns about Kraft Heinz’s culture. But there is new leadership waiting in the wings and things could absolutely turn around. In April, the incoming CEO, Miguel Patricio, was explicit about his determination to do just that by moving the company's focus from cutting costs, mergers and acquisitions to a focus on culture and strategy (Naidu, 2019).


“These next two months, I’m going to dedicate fully to knowing the people (at Kraft Heinz), to build on culture, to agree or tweak the long-term strategy of the company, and to know the financials behind the business in detail. These are the four big things I want to do,” Patricio said (Naidu, 2019). “I bring diversity of thought to the team. My background is very different from the background of the other team members. And I think that this is critical in any company.”

A culture transformation is a slog. It won't come easy and it certainly won't be fast, but Patricio is in the right mindset and position of influence and power to do it. My recommendations which absolutely align with Raath's take on this necessary culture shift would be that he do the following (2018):

  • Hire or promote a Chief Diversity Officer and give that person all of the resources and executive-level support they could ever possibly need. Then give them more resources and support.

  • Develop and hire charismatic and transformational leaders who see a need to change how work is done and how results are achieved. They will be the people who educate and encourage people to make the necessary mindset shifts.

  • Engage hundreds (not 5-10 here and there) of employees across the organization and let them know they are heard and seen. Tell the story to everyone - internally and externally - about the way employees are helping to guide the transformation.

  • Change how they promote, reward, measure and manage. Not everyone is meant to lead people. Not every data point will make sense in the future state. Figure out who and what will tell the story that should be told rather than the one that was told in the past.

  • Analyze who and what is celebrated and how you celebrate them.

  • And last but certainly not least: Be honest about the horrible leaders at all levels. Move them out of the way and make and save space to promote and hire high performers.

That should give stakeholders a great deal of comfort and hope for the future. Leaders who know that diversity and culture are really all that matter can enable a strategy for sustainable success. As a lifelong student of all things leadership, people, culture and change, one thing I have learned for sure (and this will be no spoiler for my classmates): It's not the foosball tables or even the free food that make high-performers engage and bring their A-game each day. While perks are nice, what really matters is whether or not leadership cares about the personal and professional health of their workforce.


We spend far too much time and energy at work to be miserable and I (and millions of other high-performers) would rather not work for or with people who put policies or profits over people.


Resources:

Frost, N. (2019, February 22). Cheesed-off investors wiped $16 billion off the value of Kraft Heinz. Retrieved June 14, 2019, from https://qz.com/1557269/kraft-heinz-lost-12-6-billion-in-2018s-fourth-quarter/


Hirsch, L. (2019, May 08). Misconduct at Kraft Heinz puts spotlight on employee pressure to meet bonus targets. Retrieved June 14, 2019, from https://www.cnbc.com/2019/05/07/misconduct-at-kraft-heinz-puts-spotlight-on-pressure-to-meet-targets.html


Kraft Heinz Company. (2019). A Platform for Performance. Retrieved June 14, 2019, from http://www.kraftheinzcompany.com/


Naidu, R. (2019, April 23). Kraft Heinz's new CEO looks beyond cost-cutting, big M&A. Retrieved June 14, 2019, from https://www.reuters.com/article/us-kraft-heinz-ceo-strategy/kraft-heinzs-new-ceo-looks-beyond-cost-cutting-big-ma-idUSKCN1RZ007


Raath, R. (2018, April 23). Kraft Heinz's Culture Crisis. Retrieved June 14, 2019, from https://www.forbes.com/sites/johnkotter/2018/04/19/kraft-heinzs-culture-crisis/#7f425da4250d

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