Mindy Mackenzie, senior vice president and chief HR officer, Beam
"The spirits industry is built on family heritage — and that sense of heritage runs deep in our organization," explains Mindy Mackenzie, senior vice president and chief HR officer at Beam Inc. "We think of ourselves as a 218-year-old start-up company with extremely high potential. However, a few years ago, it became evident that we had no clear identity; our company values were murky, and our culture was undefined and disparate at best."
In 2005, the spirits company experienced major growth through acquisitions. It continued on its transformational journey by enhancing its routes to market and hiring a new CEO several years later. "When I arrived at Beam in early 2010, a new, focused, three-point growth strategy had been introduced, but the talent strategy and culture to support that growth were undefined," says Mackenzie. "While we had strong subcultures in local market operations and among individual brands, we didn't have unity. There was no 'one Beam way.'"
It was clear that a significant cultural mind shift was necessary. Mackenzie and the HR leadership team knew they needed to transform HR into a strategic function that could help Beam become a vibrant, cohesive organization, supporting its current position as the world's fastest-growing spirits company.
"To unite the organization and improve company performance, we really needed a cultural transformation that would inspire deep employee engagement, passion and performance," says Mackenzie. "We wanted to rehydrate our culture and build a unified identity."
Listen and Learn
It was 1795 when Jacob Beam filled his first barrel of bourbon, laying the foundation for a family business that endured through the hardships of U.S. Prohibition. Following the alcohol ban's repeal in 1933, the Beam family immediately returned to producing bourbon under the leadership of James (Jim) B. Beam.
Seven generations later, the Jim Beam family tradition continues today. In 2005, Frederick Booker Noe III, the great grandson of Jim Beam, filled the company's 10-millionth barrel of bourbon. That same year, Beam purchased more than 20 spirits and wine brands from Allied Domecq.
"This was a major acquisition executed within a very short time period," explains Kim Pohlschmidt, senior manager, compensation and benefits, at Beam. "The transaction doubled the company in size, and the integration left us with significant cultural challenges."
Fast-forward to Mackenzie's arrival in 2010. That year, to better understand what was happening within the company, the executive team and HR partnered together, and turned to its global stakeholders and internal senior leaders. "We listened and learned, taking an outside-in approach," says Pohlschmidt. "We asked stakeholders and leaders to describe their view of Beam's company culture."
Explains Mackenzie, "This nontraditional path of looking from the outside in — and from the bottom up — revealed valuable opportunities for improvement."
Towers Watson's Andy Goldstein (left), senior consultant,
executive compensation, and Frank Cortese, vice president,
compensation and benefits, Beam
The feedback identified a set of technical and organizational capabilities to be targeted for development. "The technical capabilities became the core competencies at which we must excel in order to beat the competition, and the organizational capabilities became our statement of cultural intent," says Mackenzie. "We aligned these with our growth strategy, embedding the culture and organization priorities in the 10 annual company-wide priorities."
At about the same time, Beam announced it would soon become a stand-alone public company. Fortune Brands (a holding company) had decided to separate the three businesses it then owned. Fortune sold its golf enterprise, and spun off its home and security unit. Then Fortune Brands changed its name to Beam Inc., with a sole focus on the spirits business.
"Becoming a publicly traded, pure-play spirits company was an exciting step in our history," says Frank Cortese, vice president, compensation and benefits, at Beam. "It meant big changes for HR. We had to fully understand what being independent and public meant for HR and for the company."
Beam turned to Towers Watson for help. "We'd been working with Towers Watson on a variety of projects for the past several years, so they were the logical candidate," says Cortese. "They became an invaluable partner and advisor."
The first step was ensuring that Beam's total rewards strategy and programs would serve its future as an independent public company. The Towers Watson team worked with HR leaders to evaluate the company's existing reward offerings, and to design a reward strategy and programs that would promote the company's vision and support its priorities.
"We definitely had some broken pieces," says Pohlschmidt. "And if we were going to advance a revamped culture, and foster ownership and accountability among our employees, changes were essential. We needed a total rewards strategy that would drive employee engagement and superior market performance, and help us continue on our journey of transformation and growth."
Beam's director of people strategy and solutions,
Steve Molony (center), with Kevin McGarvey, senior
retirement consultant and account manager,
Towers Watson, and Kim Pohlschmidt, senior manager,
compensation and benefits, Beam
Redesigning Beam's total rewards strategy was the next step. Objectives included aligning the reward strategy with Beam's business strategy; optimizing reward program investments to generate value for employees, customers and shareholders; providing flexibility to reward employees for value-creating efforts; and supporting Beam's objective to attract and retain top talent.
"With our shift to being an independent, public company, we wanted to link all members of the Beam team to one set of goals, one vision and a mindset of having ownership in all we do," explains Steve Molony, Beam's director, people strategy and solutions. "With the help of Towers Watson, we developed a reward philosophy that meets our unique needs."
Once the strategy was put in place, the HR team got to work overhauling numerous reward elements to be more in line with the market, enabling Beam to remain competitive. The first change came in the form of an employee stock purchase plan, which gave employees an easy way to become direct owners of Beam stock.
Next, the HR team made the decision to freeze the U.S. pension plan for current participants. The team also redesigned the long-term incentive plan to give leaders more equity in the company and align all leaders around a common plan; enhanced annual incentive plans, including an enterprise-wide element; and began the process of moving to a center of excellence model for all HR transactional processes.
In addition, the HR team is developing a new banding structure to further encourage collaboration, ownership and alignment among employees. "Every role, band level and compensation range is being reviewed and remapped to the new structure," says Kevin McGarvey, senior retirement consultant and account manager at Towers Watson.
To help employees understand the many changes taking place within HR, an extensive change management and communication plan is in full swing at Beam. "Change, in general, is hard," explains Molony. "So it's critical to communicate with the workforce about each and every change, and its importance."
This communication is being delivered in various ways, from e-mail, intranet postings and weekly leadership blogs to quarterly global town hall webcasts and teleconferences. "Constant messaging helps us accelerate the company's cultural transformation," says Molony.
A Continuous Journey
"We are making progress," says Mackenzie. "Our new programs have been well received, and more changes are on the way. Employees feel more connected now, and they're proud to work for Beam."
Mackenzie points to Beam's recent employee engagement survey, which found a favorable employee engagement level of 74% and a manager effectiveness rating of 85%. And surveys following global town hall forums have found that 96% of employees understand Beam's strategy and their role in executing it. "But we have more work to do," she says. "Our transformational journey is an ongoing work in progress."
She adds: "Next year, we'll go back to our external partners and stakeholders, and ask them what they think of our progress," says Mackenzie. "It's imperative to keep asking the important questions and viewing ourselves from the outside in. We must continually engage and lead. It's the only way for our brands and our company to have long-term success."
Beam's HR leadership team offers the following words of wisdom on reinventing total rewards:
- While change can be difficult, it's vital because your competition is changing at the same time. Start with the end in mind; with every decision, ask yourself, "Will this help me get to the end result?"
- External consultants are beneficial because they bring outside expertise to help you craft a solution that's right for you. When you work at a company, you tend to get an insular view, but working with a trusted advisor allows you to see the risks and benefits as well as the big picture.
- Leadership support is crucial to effective change. Getting buy-in from senior leaders allows you to create a successful program.
- Ongoing communication with employees is critical. Develop comprehensive communications that are open, honest, clear and concise.
- Be radical. Do something different. The status quo isn't always the best path. Take a leap, and try something new.
- Take the necessary time, and be patient. Change doesn't happen overnight.