‘He had to change’: How Diageo CEO Tim Salt became human and why his business is super-engaged

Fiona Smith Columnist

‘He had to change’: How Diageo CEO Tim Salt became human and why his business is super-engaged

Published 08 November 2013 07:39, Updated 08 November 2013 07:40

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Diageo chief executive Tim Salt had an ‘ugly way’ of operating during his years at Pepsico but says he has left it behind him. Photo: Michel O’Sullivan

When the managing director of drinks company Diageo says he used to be too competitive, he’s not kidding. In fact, it is the first thing his former boss at Lion Nathan, Gordon Cairns, recalls about Tim Salt. “He was very internally competitive,” says Cairns, a director of Westpac Banking Corporation and Origin Energy, and former CEO of Lion Nathan, where Salt worked in the 1990s. “He also didn’t take feedback very well,” Cairns says, raising his eyebrows for effect. “He had to change or he would never have been successful at Lion Nathan.” When Salt joined the beverage and food company (now known as Lion), he was a young gun who had absorbed the dog-eat-dog culture of Pepsico over six years in the US and Australia. Pepsico is a “very intensely competitive organisation”, says Salt, who had been marketing director of international cola.“The people there all want to be seen as better than the next person and, if someone was going to be fired, it would be the next person. They are internally competitive.”

That kind of behaviour was encouraged by performance reviews that focused solely on performance and results. “There was nothing about people and culture and leadership. That was just the way the culture was – a very simplistic one.

“If they were not performing, they were hung out to dry, because they were going to get sacked,” he says. “You could see [the non-performers] a mile off. The bosses stopped standing up for them if they were challenged by others.”

Joining Lion Nathan was a culture shock for Salt. Cairns was using a change program to turn around a company suffering from declining market share.

A key part of the program was the self-transformation of Cairns, as CEO, from a self-described demanding, insensitive and excessively task-oriented person into a more affiliative, humanistic and encouraging leader.

Lion Nathan used a tool, developed by Human Synergistics International, that plots behaviours by colour – red, for instance, referring to aggressive, destructive styles, and blue to more constructive and humanistic behaviours.

Salt says: “The whole thing about Lion is about how you deliver”.

From a sea of red to an oasis of calm

In 1998, when he first used the tool, known as the Life Styles Inventory, Salt saw a sea of red in himself.

“Lion [as a company] was blue. I was amazed how red I had become,” he says. “A lot of it was a lack of personal awareness. There was a lack of openness to new ideas from others, being perfectionistic, and concentrating on minute details that don’t fundamentally affect the big picture. There was playing power games – potentially across the organisation. It is a fairly ugly way to operate.”

Salt says the feedback was a surprise to him. “It was news to me. They were the skills I needed to survive [at Pepsico]. It was confronting at the time.”

Salt says he really got the desire to change when he saw how his behaviours were affecting his relationships with his wife and friends.

“The characteristics I showed at work were showing up at home,” he says.

Then he had children and his desire to be the best father he could be ensured he remained committed to change.

When Salt was appointed CEO at Diageo in 2008, he brought the Human Synergistics tool with him. He now ensures there is an “ongoing feedback loop” by sitting down with his six-person executive team every second month to talk about how things are going.

“It takes a lot of trust and belief in others around the room to engage in that type of conversation,’’ he says. “It is confronting. I ask people who work for me to give feedback about what I am doing well and what I am not doing well.”

Diageo also uses the services of a firm of psychologists, YSC, which works with 60 leaders from the company to help create cultural change. Salt says his job is to “coach the team” and, through creating a feedback loop, he hopes he will get “muscle memory” in his brain.

“The hardest thing for me is to get the difference between being competitive and being achievement-focused.

“I used to think you would want to smash the competition – and that is very destructive behaviour.”

Salt says he now looks to athletes such as swimmer Murray Rose and runner Cathy Freeman, who achieved by concentrating on bettering their own times, rather than pitting themselves against the performances of others.

The benefits of cultural change

He says the cultural change program has had solid results for the company: “Five years ago, Diageo was full of passionate and talented people, very consumer-led, very consensus-driven. There was a lot of group consensus about how decisions are made, but there was also a lack of accountability around the decisions . . . and the company was probably under-achieving its potential.”

Today, Diageo, with 530 people employed in this country, is making headway on its target to be in the top three packaged-goods companies for customer engagement and has made some small gains in reaching a market share of 32.7 per cent over five years in a very competitive market.

Staff turnover has halved in that time to between 10 per cent and 12 per cent a year, which is a healthy level when you want enough new people coming in to refresh ideas. Employee engagement has historically been high (remaining steady with 90 per cent of staff rating themselves as engaged) and 57 per cent of employees rank themselves as “super engaged”. The Australian operation of the London-based company has the highest engagement score of the 22 Diageo business units. “The benefit is a high degree of resilience, which has helped us go through a fairly challenging time”, he says, noting that the Australian operation did not have cut any jobs during the global financial crisis.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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