Making Intelligent Talent Decisions During Business Transformations

Our firm has the privilege of working with exceptional CEOs, Private Equity Firms and CHROs in placing Human Capital/Talent leadership nationwide. There has been a significant transformation taking place in how Board of Directors and business leaders think about culture, leadership development and their overall talent strategy.

Tracey Staley has helped lead significant business transformations with Global Fortune organizations, Lockheed Martin and US Steel as well as a PE held, $900M domestic consumer products company, Ainsworth Pet Nutrition, growing from 150M to > 900M in gross revenues, and eventually sold for $1.9B, a 22X EBITA multiple.

In a recent conversation, I asked her to share some insights on her strategies, experiences, and learnings. 

JOE: What was your philosophy as a CHRO and partner to the CEO and Executive Leadership Team?

TRACEY: To have success, there should be a strong link between your business and talent strategy. You will not reach your greatest results without great talent. Top business results are achieved by placing the right people in the right roles where they can use their talent to maximize value. Leaders must know what capabilities are required to execute their strategy, identify the best people with those capabilities, and enable that talent to work with agility. 

A key, but often overlooked, aspect of talent strategy is the organizational culture. The culture of an organization builds muscle memory for the workforce. No CEO or leadership team can, or should, direct the day-to-day decisions that are made by every employee. Workplace culture creates standards and expectations that guide employees to work in a way that drives the business strategy. If the culture is misaligned from the business strategy, the organizational performance will suffer.

JOE: Describe your most significant business transformation experience?

TRACEY: My most recent role as SVP and CHRO of Ainsworth Pet Nutrition (APN) was the most significant, and successful, business transformation. APN’s journey started as a small family owned business dedicated to value-based pet food marketed through mainstream grocery channels. By 2007, it was clear that APN was on the wrong side of industry trends and facing revenue decline. The Pet Specialty retail channel (e.g. Pet Smart, Pet Co, and others) had taken significant category share, behind the growth of channel exclusive Super Premium brands, at the expense of traditional Grocery and Mass channels. The industry-wide Pet Food recall of 2007 also served to accelerate consumer flight to perceived quality/safety, amplifying the trends of humanization and premiumization within Pet Food. APN, conversely, had no Super Premium offerings in the company’s portfolio, limited sales in Pet Specialty, and was focused heavily on their non-branded business.

The family owners of APN made the strategic decision to transform from a value branded and private label business to focus on the Super Premium pet food space. Next, the company bucked the industry status quo and focused the Nutrish premium pet food brand launch in mainstream grocery channels vs. Pet Specialty channels, filling an unmet consumer need for convenient, specialty products.  

To execute this strategy, the company hired an influx of talent from traditional CPG backgrounds – people with big company experience, but the agility and mindset to succeed in a smaller company environment.

It became clear that long-serving employee capabilities were no longer keeping pace. This required difficult decisions to move employees to new roles where they could be successful, sometimes outside of APN. We also updated our HR systems and processes to provide the critical data to support our new talent strategy.

With the right priorities and talent in place, we knew that creating a higher order professional purpose for employees was critical to building employee commitment and unlocking business performance. It would also be essential that every employee understand how their specific role laddered up this broader company purpose. 

To this end…

Ainsworth leadership started with a focused rollout of the Ainsworth Vision, Mission, and DIG IT Values, (Drive, Independence, Grit, Integrity and Team),

We leveraged a sustainable internal marketing campaign designed to help the entire workforce see the importance of their role in the APN journey and how each contributed to marketplace promise of Pet Store Quality, Supermarket Easy. The objective was to create organizational ‘muscle memory’ for an enduring change journey by aligning all aspects of the employee experience to APN’s vision, values and business strategy.

This dramatic transformation culminated in 2018 with the J.M. Smucker Company acquiring Ainsworth Pet Nutrition for $1.9 billion, a 22x EBITDA multiple.

JOE: What were your most critical talent decisions?

TRACEY: We took a series of steps to align our culture, talent capabilities and people investments with our new business strategy. 

• Marketing capability became strategically critical as we built a differentiated super-premium pet food brand competing against hundreds of pet food brands with long established customers. 
• We added new research and development capability to design new super-premium recipes. 
• We needed to improve our manufacturing capability to consistently produce the new recipes.
• New finance and human capital strategies were required to prepare the organization for significant growth. 

With the right talent in place, we knew that creating a "higher order professional purpose" for employees was critical to building employee commitment and unlocking business performance. It would also be essential that every employee understand how their specific role laddered up this broader company purpose. To this end, Ainsworth leadership started with a focused rollout of the Ainsworth Vision, Mission, and DIG IT Values, (Drive, Independence, Grit, Integrity and Team), leveraging a sustaining internal marketing campaign designed to help the entire workforce see the importance of their role in the APN journey and how each contributed to marketplace promise of Pet Store Quality, Supermarket Easy. We then worked to create organizational ‘muscle memory’ for an enduring change journey by aligning over time all aspects of the employee experience to APN’s vision, values and business strategy.

JOE: How should business leaders evaluate the use of their resources during transformations?

TRACEY: No business has unlimited resources. As a key resource for strategy execution, a business must invest wisely in talent and culture. That means taking a long view to develop and retain a team that consistently builds value by investing in:

• Identifying, recruiting and compensating the best talent
• Work practice and organization design to support agile operations
• Leadership capability to support and enable great talent to achieve great results
• Individualized development and coaching for key players
• Technology to understand workforce needs, support performance results and effectively manage the organization

JOE: What common mistakes are made and why?

 TRACEY: Even businesses committed to the importance of people investment can fall into mistakes with talent investment. It is easy to spread employee development investments equally across the workforce. This may be done to be “fair” to all employees or out of fear of disappointing some employees. Employee development should be offered broadly and disproportionately applied to a business’s most strategic players in the most strategic positions. There are the people in the roles who will ensure the success of the business. Another trap that leaders fall into is allowing the top 2% of talent to opt out of development experiences because they are required to work a critical project. Finally, when belt tightening is required, it is too easy to cut people investment first. That doesn’t mean talent investments are sacrosanct. They should be evaluated as other critical investments are.

Avoiding these mistakes starts at the top of an organization. Businesses that see talent as an important value creator must have Boards that keep talent at the top of their agendas.  Board of Directors should play an active role in talent management to help ensure that the company never has weak performers in the most critical roles. They must also hold leadership accountable for talent strategy results, as they do for financial reporting, operating results, executive compensation and other critical functions. 

JOE: Provide examples of how organizations can become more agile.

TRACEY: Agility starts with culture. Culture creates expectations around work practices, risk tolerance and communication and decision making. At APN, we knew we needed to keep an entrepreneurial culture while adding smart process to manage growth with agility. Our DIG IT values started with Drive (We celebrate those who get things done. The people who step up, and those who step in with an unshakable determination and urgency to move us forward.)  This emphasized the expectation of agile operations. Leadership regularly empowered decision making at the lowest level possible.

Organizational design can also impact agility. A centralized operational model achieves cost efficiencies but can add bureaucracy and slow down decision making. Creating independent business units enables more agile operations. Adding management levels also tends to slow down process. Flatter organizational structures will have fewer managers for the decision making and process approvals. 

The best fit for an organization’s structure and operating model depends on the business strategy. Low-cost service providers may prefer centralized operations to manage costs. Businesses with a customer intimacy strategy may need a decentralized organization model to facilitate agile decision making to address unique customer needs. 

JOE: Explain why having data on talent was critical to achieving your desired business outcomes.

TRACEY: Successful business leaders use data to guide most business decisions. Too often, talent related decisions are not fact-based. A business must have talent, data-based IT to manage human capital as wisely as financial capital. Survey data can assess a workplace culture and keep it aligned with your business strategy. Employee performance and development data enables a business to identify, and cultivate, the top 2% talent that are most significantly driving your business results and value.