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THE STRATEGIC ADVANTAGE OF BEING AN AGILE COMPANY (Planning and Organising)

Updated: Apr 18

Chapter 2, The Wine Farm SOUTH AFRICA

Knowledge is Power

- Old adage

Leadership is solving problems. The day soldiers stop bringing you their problems is the day you have stopped leading them. They have either lost confidence that you can help or conclude you do not care. Either case is a failure of leadership.

- Colin Powell, US statesman (1937-)

The story: Understand where you are before deciding where to go.


A large concrete manufacturing company (let’s call it Acme Inc.) bought a wine farm. Their motive was only this: to get access to the high-quality granite which lay only a meter below the ground.

The investment made good sense: firstly, the granite that lay so close to the surface could be accessed at low cost because relatively little earth and rock needed to be excavated and removed; secondly, the property was ideally located near several fast-growing urban centers.

Included in the purchase price was the cost of the mineral rights, which meant the company now owned the rock under the ground.


From Acme’s perspective, it was a foregone conclusion that they now also owned the mining rights, so when they made an application to mine their rock and the application was rejected, they were stunned. It turned out that the neighboring farmers had – understandably – put in a petition to prevent mining activities on the farm, because they were worried about damage to the environment (noise, air pollution, heavy vehicle traffic, and so on). Acme owned the granite all right – but was not allowed to mine it!

When Acme had put in their proposal to buy the property, they had been looking at the acquisition solely in terms of its mining potential, with an emphasis on optimizing their return on investment.

When their mining application was rejected – and after some soul-searching – they decided instead to take over the grape-cultivation business and produce their own wine, hoping in this way to still get some return on their investment. Nonetheless, many of the company’s key decision-makers expressed concern about focusing resources, time, and energy away from their core business.


It would have been a great help if the farm’s previous owner (the wine-grower) had been available to give them some idea of the vineyard’s potential, as well as how best to manage the existing workers, but he had left some time before the sale went through. Acme had to start from scratch in an industry they only knew about from a customer’s perspective: table grapes and wine.


So they began with what they had: a team of farmworkers who had been on the farm for generations and had plenty of experience working in vineyards. Acme understood that one of their first tasks would be to evaluate the competence of these workers, after which they would be in a position to plan accordingly.


Early lessons learned


As they always did, Acme decided to put together a strategic plan for their new business. This was not as easy as it may sound, because their business development team was used to making five-to-ten-year projections for multi-million-dollar organizations. Now they had to scale everything down, leaving out everything except the essentials, and state the whole thing in simple, easy-to-understand terms.


Evaluating the current workforce

As I was in charge of the Human Resources (HR) aspect of Acme’s strategic plan, I started to examine the competence and potential of our existing workforce. The level of formal education of the farmworkers was poor, as most of them had had to leave school very young to help earn money to support their families.


During negotiations to buy the farm, Acme had agreed to re-hire the existing farmworkers to work in the quarry it was planning to set up, and to train them for their new positions.

I had already identified two potential foremen as well as some key operators for the quarry we had been planning to create.


After the granite-mining plan fell through and Acme decided to try its hand at wine-growing instead, you could be forgiven for thinking that relaunching the wine farm would be easy, because our workers would be able to go on doing what they had always done. However, we were about to challenge some of the wine-growing industry’s norms; in particular, the remuneration system.


Payment


Acme obviously had no prior experience in the agricultural sector. We discovered that the farm workers’ weekly pay was way below Acme Inc’s minimum wage, and that part of the workers’ weekly pay-packet had traditionally consisted of a bottle of wine on Friday afternoons. This practice had naturally resulted in problems with the behavior of some staff on Friday nights!


Changing the payment system caused more problems than we had anticipated. Among other things, the higher wages we paid caused dissatisfaction among the workers at neighboring farms, which in turn soured relationships with the neighboring farmers. But we refused to back down on pay rates.


At the same time, we were realizing that our top priority was to employ an experienced wine-grower – a hands-on farmer who knew all the intricacies of winemaking. The new farmer’s most important task would be to get the farm back into working condition, as it had not been in production for over a year. Besides, we needed the successful candidate to start mending relationships with neighboring wine-farms. As it turned out, there were not many people in the country able to fulfill such an impressive list of requirements.


Finding the new manager


Acme hired a professional agency to carry out the search for a new wine-grower. We ended up with a shortlist of two candidates.


The first candidate, whom we’ll call Anton, spoke three languages fluently: English, Afrikaans, and French. He had worked in France for five years and was a great salesperson. At his interview, he seemed to be the answer to all our problems.

The second candidate, whom we’ll call Bert, spoke only Afrikaans, mumbled his way through the interview, and never made eye contact with Acme’s managing director. Bert did not even answer some of the questions put to him and seemed to be altogether out of his depth in an interview situation.


According to their references, however, Bert was the better farmer and winemaker.


The Human Resources perspective was that Bert was the candidate the wine farm needed. The director, however, decided on Anton, who sold himself based on a top-class wine he had created and launched with a marketing strategy built around his own dynamic personality.


Anton was able to start immediately, whereas Bert would only be able to join us in three months’ time. Against our recommendation, the director employed Anton.


Two years later, at a critical moment in our marketing campaign for the new wines, Anton left us to join another company that was offering him a higher salary. My HR team and I would have preferred not to be proven right in this case!


Crafting the strategic objectives


The gaps we had in the company’s organization chart were mostly at higher levels. One of my goals was to try and fill them from the ranks.

The two foremen and I met regularly to discuss each employee’s degree of motivation and potential for development.


These were one-sided assessments and therefore not ideal, but under the circumstances, they were a reasonable starting point.


In the first week, I completed a chart estimating each employee’s development potential, stating what could be expected of them in their current positions and their level of motivation to get the job done. This chart gave me and the two foremen an overview of the potential we had.


Our business strategy started with three key strategic objectives, which, as we explained to the wine-maker and the two foremen, were what the company was aiming to be, not what it was aiming to have.


For example, one of the strategic objectives was for the farm to be recognized at the end of its first year in business as a minor player in the Cape wine industry, as demonstrated by the awards that are given out at an annual evaluation of all Cape wine producers.


Our target was to win one Gold award for our new Chardine wine. In Year One we narrowly missed the award, but in Year Two we won the Gold in two sections!


Reviewing how you are doing – regularly


The wine-make, the foremen, and I met regularly to review progress toward our goals, and to take note of any problems we needed to address. Acme’s managing director was present at these discussions as well.


Most of our early work focused on improving the living conditions of the farmworkers. We started with their housing, transport to school for their children, and making part-time work available to the wives outside high season.


By the end of Year One, they had a newly equipped winery, their marketing strategy was in place and they had found a name for the new wine. Because this wine was a total newcomer to a well-established market, they focused on selling it to the employees of the Acme Inc. group of companies. A few cases were sold to selected wine shops at initial offer prices, but the real revenue in the first year came from Acme group's internal sales. In fact, they sold out their entire production for that year!


Achieving the strategic objectives


The personal involvement of Acme’s managing director was a major factor in achieving this excellent result. He even accompanied the new winemaker on a roadshow presenting the new wine to all the group’s companies.


By all reports, it was a good wine, but the director’s enthusiasm enabled them to get a foot in the door of a very competitive market.


By the end of Year Two, they were receiving public recognition and were well on the way to fulfilling their Year Three objectives. By the end of Year Three, the wine farm had met all the targets in its original strategic plan and opened a restaurant.


A note on measuring your progress


Efficiency and effectiveness are the key metrics of human performance.


Efficiency

Efficiency is the act of performing or functioning in the best possible manner, with the least waste of time and effort.


For example, you have to pick all the avocados on a tree, even those at the top. If you are efficient, you find a ladder that is tall enough, place it in the most stable place against the tree, then send your fastest avocado-picker up the tree. This is very efficient, even if you put the ladder against the wrong tree, e.g. a cedar tree.


Effectiveness

Effectiveness is about performing the right task, which consists of choosing the right activities to achieve the right goals.

In our example, you would make sure you have the right tree before you look at the best way to pick the avocados at the top of it.

Looking back at my experience with Acme, I realize how valuable it was for me. Their decision to make the best of the wine farm showed me the value of evaluating a situation before trying to plan the future. This lesson was to become a key part of my approach later on when I was working on strategic development for small- to medium-sized companies (SMEs) in Asia. This principle went on to become a cornerstone of my consulting work.


The annotated organization chart


In most of the companies owned by Acme, their HR departments used a tool called the annotated organization chart (AOC), on which each job position was identified by

  1. the job title

  2. the name of the current job holder and

  3. the three letters P, D, and M (for Potential, Development, and Motivation).

The PDM model for performance appraisal


These three metrics were used in the monthly performance appraisal of each employee, and also for the quarterly performance evaluation (similar to the appraisal but concentrating exclusively on recognizing and rewarding a person’s contribution). The appraisal meeting, like the evaluation, consisted of a three-way discussion among the three parties concerned: the employee, his/her boss, and a representative from the HR department.


Each metric, P, D, and M, received a rating on a scale from 1 to 3.


Potential (P)

P1 means the employee has the potential to perform competently in his/her current position. The majority of staff started as P1 on the AOC and stayed at that level until they had proved otherwise.


One way we used to evaluate potential was this: whenever an employee with management or supervisory responsibilities went on holiday or was seconded (temporarily moved) to another position, one of that manager’s subordinates would be offered the opportunity to be an acting manager.


During this limited period, the way the acting manager handled the responsibilities of being boss gave HR some idea of his/her potential for promotion.


P2 means the employee has the potential to perform competently in a position one level up in the hierarchy (in other words, in the job of that person’s immediate superior).


P3 means the employee has high potential, in other words, is considered to have the potential to perform competently at more than one level above their current position in the hierarchy.


Development (D)

Each employee was assigned a level of development (1, 2, or 3) based on two factors:

  • the HR estimate of training needed for that position, and

  • the individual’s actual performance on the job.

When someone started a new job – via either recruitment or promotion – s/he was considered to be at entry-level. Being at entry-level implied that the starter was capable of achieving at least 50% of the Key Performance Indicators for the post they were occupying and that they were expected to become fully competent within some fixed period of time.


Of course, the time it takes to become competent varies according to the complexity of your job.


As a rule, no one is ever fully competent when they start a new job – unless they have been wrongly selected for the post in the first place! A new hire should not be able to do the job with his/her eyes closed, as they would be bored to tears very quickly.


After a starter has successfully completed the full training program, the focus shifts to their performance and behavior on the job.

  • D1 (or entry-level) means the employee is still being trained for the current position.

  • D2 means the employee has completed all necessary training for the current position.

  • D3 means the employee is being trained for a position at a higher level. (This usually accompanied a Potential rating of P2 or P3, for obvious reasons.)

To ensure employees’ ongoing development, each job holder’s immediate superior received their monthly action plan from HR, showing which targets had been met and which were still in progress.


Motivation (M)

M rates the level of motivation shown by the job holder. Like the other two metrics, it was evaluated once a month as part of the ongoing performance appraisal process for every employee.


I talk a lot more about ways of implementing systems that improve motivation in Chapter 5.


As has already been mentioned, the employee’s P, D, and M classification would always be discussed and agreed on by three parties – the job holder, the immediate superior, and someone from HR.


For example: on the AOC you might have the following:


Job title: Maintenance Foreman Name of job holder: John Jones P3, D2, M3.


From this, you can ascertain that John has high potential (able to move up more than one level in his current section or even sideways and upwards, to a higher level in a different section).


D2 shows that John has been fully trained for his current position, is competent in it and is ready to start development for a post with more responsibility (which he and his superior would agree on together at some point in the near future).


M3 shows that he is highly motivated (as demonstrated regularly by a willingness to take on new tasks, to take the initiative, and to learn on his own). These qualities must of course be present in addition to the basics, such as good time-keeping and attendance at work.


Every month, all the latest Ps, Ds, and Ms for one department were put in a spreadsheet, and the number of 1s, 2s, and 3s was counted for each. This gave a snapshot in time telling us how much potential we had, how well trained they were, and what their motivation was like.


Such information is essential for good decision-making, as well as for the setting of priorities.


The PDM model gave us a reasonable understanding of the wine farm workers’ strengths and weaknesses, highlighting whether we needed to recruit, promote or develop each worker. This was essential information if we were going to be able to meet our targets. The AOC provided the big picture of Acme’s employees in diagrammatic form – much easier to interpret than pages of text.


Key points


In any new situation, you need to assess not only the company’s physical assets but the human ones. Do a SWOT analysis: your SWOT grid will show you whether your Opportunities are matched to your Strengths, as well as whether potential Threats are compounded by inherent Weaknesses.


Work out a simple plan of action based on what you currently have (assets, weaknesses, etc.) especially in terms of the human beings working for you. Focus most of your attention on the Strengths and Opportunities that are going to make your business successful. Where competence is lacking – where Weaknesses are matched by Threats – decide to develop where you see potential, recruit where there is no potential, and at worst, neutralize the Threats.


Get everyone involved to whatever degree they are able, and then make your plan visible to everyone in the company with targets and mini-targets for individuals and teams. Review all of the above regularly, taking action to rectify shortfalls. Celebrate success, face up to failure, review … and move on!

Copyright © 2018 Robert Bluett


All rights reserved. No part of this book may be reproduced in any form or by any electronic or mechanical means including information storage and retrieval systems, without permission in writing from the author.

Publisher: People Plus (peopleplusco.com)

Third Edition: 2020

ISBN: 978-1-387-74575-3

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