Pulling power – people management is the key

Nel, global HR director of brewer SABMiller, explains how a strategy based on
performance management has helped the company get ahead of global competition.
DeeDee Doke reports

A belief that people are the greatest source of competitive advantage is
underpinning cultural changes at brewing giant Miller, following its
acquisition by South Africa Breweries (SAB).

Johann Nel, the first global HR director for SABMiller, told Personnel Today
that performance management aimed at increasing competitiveness is the core
element of the organisation’s worldwide HR strategy.

The changes at the Miller arm of the business are being driven from the top
by SAB’s Beer South Africa chairman and managing director Norman Adami, who
became Miller’s president and CEO earlier this month, replacing John Bowlin.

SABMiller was formed after South African Breweries acquired the Miller
Brewing company for 430 million shares worth $4.9bn in July 2002.

Company strategy

Nel – a burly, tanned South African with a fondness for cigarettes – has
been in his role for less than a year, and explained how important it was for
the new organisation to be underpinned by a single, performance-based people
management strategy.

"Fundamentally, what I call the propositions of HR are that we want to
establish human capital competitiveness as a strategic priority in any business
that we’re operating in," he said.

SAB began a rapid expansion in the 1990s in developing and under-developed
countries by acquiring existing local brands and boosting their operations to
higher performance levels. Therefore, the drive for success had to be based on
its so-called ‘people proposition’.

"The whole proposition of how we expanded or created success was based
on the quality of the people we sent into those operations, and the degree to
which we were capable of transferring the SAB capability in terms of
management, technical capability, brand-building, sales and distribution
capability," said Nel.

Thanks to the high quality of managers SAB dispatched into the developing
operations, the company has also managed to develop local talent and skills in
markets such as Russia, the Czech Republic, Hungary and Poland, among others.
And business is good (see box, below left).

By conducting business as it has in Eastern Europe, SAB is continually
perfecting a strategy that Nel said is very difficult to emulate, as it needs a
long-term type of philosophy and process.

"It’s the development of top-calibre people who are highly
competitive," he said. "So that is a critical piece of our overall
strategic direction."

At SABMiller, HR functions as a business partner and "as a strategic
vehicle to effect change and to affect competitiveness", Nel said.

"First, it has to align the organisation with achievement of the
strategic priorities. And second, it has to create a robustness within the
organisation which makes the company capable of rapid adaptation to new challenges,
and that it has the agility to move quickly as new competitors’ requirements
surface. That’s the philosophy."

A critical component of the HR strategy, said Nel, is focusing limited
resources on the company’s highest leverage activity.

"There is no more space in organisations for huge, highly populated HR
departments with lots and lots of people doing lots and lots of admin that
doesn’t really add value to the organisation," he explained.

"HR has got to find what are those activities and components within
that organisation that will leverage the most strategic success, and focus on
those with the responsible resources."

HR’s company role

To do that, he said, line managers must take on the responsibility of
actually managing their people. In South Africa, the company (along with
software provider SAP) developed a performance management system in which HR
set up the framework and processes to help managers do the work, leaving HR
free to serve more as consultants, and run key strategic and change projects.

"We are assisting where the organisation might need to be restructured
– upgrading the workforce at whichever level the company needs in terms of
talent, identifying the most important competencies the business requires and
developing those as an output to the organisation," said Nel.

Its role also involves measuring the level of competence that has been
acquired at any given time through training, and how that competence fits in
with any new challenges on the horizon.

"The next proposition is to effectively house that within a performance
culture – to create across the business a company-wide standard of
performance," he said. This will involve building differentiations in pay,
advancement and all aspects of reward into a culture of superior performance.

The concept of people being the great variable in what makes one company
succeed while another fails, is what excites Nel about HR.

"It is easy to replicate a brewery or any kind of manufacturing
infrastructure. What is not so easily copied, is how well those assets are then
managed, and how effectively that organisation engages in innovative numerator
activities," he said. "That comes from people’s creativity and

"So for me, that is the core of creating a difference between seemingly
similar firms in similar markets with similar products. What is going to make
them different? What will get a highly sophisticated, high-performing company,
trusted by the market and invested in by the market?

"It is going to be what [investors] think of the quality of the people
and the management of those organisations, and where they think those people
are capable of taking the organisation in relation to their competitors."

Glass half full as European profits surge ahead

HR factfile

– Company: SABMiller plc

– Employees: 69,000

– Locations: 24 countries

– Facilities: 112 brewing operations

CSR programme aids growth in

In response to the AIDS crisis in Africa, SABMiller has been
paying for drug therapy for its African employees and up to four family members
who are HIV-positive or have AIDS. The programme has been running since 2000
for employees who are not members of the company medical aid scheme.

Paying for the anti-retroviral therapy (ART) is one aspect of
the company’s effort to deal with the condition, which also includes
counselling and lifestyle management. The company would not reveal the
programme’s annual cost, but Nel says: "We do believe, however, that our
investment… is an investment well made."

The brewer’s policy toward paying for anti-retroviral therapy
varies around the world, depending on the insurance and social security
available to members of staff in individual countries.

Glass half full as European profits surge ahead

For the third-quarter of 2002,
SABMiller’s European operations continued its upward momentum, with an 11.6 per
cent growth in volume for its key brands.

The volume growth of its Pilsner Urquell brand, for instance,
increased by 13.5 per cent. In Russia, the volume growth for its Miller Genuine
Draft almost doubled.

Elsewhere in its global operations, the third-quarter financial
news has also been good – except in the US, where Miller’s domestic volume
(excluding contract brewing) was down from the previous year, and had dropped
by 3 per cent since SAB’s acquisition.

Other fallout from the acquisition has been the recently
announced closure next July of Miller’s smallest US brewery, located in
Tumwater, Washington state. It will force the redundancy of 400 employees.

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