Other highlights (34)
“a candid environment is one where “everyone in the company can speak up as long as they are respectful and constructive,” and where “people know where they stand” in terms of their performance and the company’s plans for them[17].”
“The importance of gaps Gaps are a recurring theme within AB InBev, which closely observes the difference between where the company and its executives are today, and where they want to be in the future (…”
“We already know that the Individual Performance index is a function of the employee’s goal attainment scorecard. Team performance, as we’ll see in further detail on the goals chapter, is how the team, as defined by everybody that reports to the same manager as someone’s, fared relative to its goals. If everyone makes their numbers, the team will have – usually - made its numbers, because individual goals are unfolded from collective goals, which are themselves broken down from firm-wide goals. Firm-wide goals follow the same logic. So it doesn’t matter if the individual had great performance for the year despite her sorroundings: she will be punished if the team doesn’t collectively make its goals, and the same goes for the firm. The idea is to align interests between rank and file employees, executives and shareholders. After Team Performance and Company Performance are assessed, the employee’s overall performance index can be calculated by a simple multiplication of the three scores: The overall score will dictate how much of the potential bonus the employee will take home.”
“Type B Breakdown: Goal-Goal Sometimes, goals can’t be broken down, because they’ve become someone’s actions, but they can be passed down to employees who share the same goal.”
“Ever since their acquisition of Brahma, the trio had dreamed of owning Budweiser. It was not only the world’s largest brewery, but also had what was probably the world’s best portfolio of beer brands. To make it an even more attractive target, AB possessed a tripod of (1) meager financial and (2) operational results, as well as (3) diffused stock ownership.”
“With the team: teamwork Teamwork is measured by leaders and a formal 360-degree annual review. What’s the professional’s ability to work with a team, motivate their direct reports, create no trouble, and breed talent within the ranks? Those who have teamwork issues but do deliver the numbers and have cultural fit may be directed to specific training…”
“At AB InBev, as at GE, losing a top talent (a 4) is a sin, and there’s a company-wide goal of top talent retention.”
“The third and last pillar of an environment where great talent feels at home is a candid one, where people discuss topics openly, with little tolerance for internal politics, hidden agendas, and opacity.”
“The magical figure, according to him, is that 80% of an employee’s goal/gap (or the company’s, for that matter) has to be achievable with the skills presently owned by him. The other 20% are the stretch that makes the employee go the extra mile[21]. Brito summarizes the concept: “A dream has to be sufficiently stretched…”
“Simplicity Common sense is as good as fancy concepts. Simple is better than complicated. - Garantia’s 18 Commandments”
“According to Marcel Telles, an employee mustn’t have more than five goals, which ensures focus and accountability. What usually happens is that administrative employees tend to three to four SMART goals and one or two projects. Goals can also be weighted according to their relative importance to the company.”
“As mentioned previously, every year leaders are required to name two possible successors who have (or are going to have in the near future) the suitable skills to take on their roles should they be promoted (or leave the company.) These promotions are discussed, at least at AmBev, in a “People Chess” meeting, where the company’s leaders, alongside the People and Management Department, discuss who’s being promoted, and to which functions.”
“Dealing with poor performance, for example, takes managers discipline, to face the facts, confront the employee, and fire him or her after a handful of feedback sessions have not brought about the intended performance improvements.”
“Horizontal organizational structure Informal companies foster environments where the best argument, not the highest hierarchy, drives decisions. Employees of all levels are welcome to join discussions if they have fact-based, well-rounded opinions that add to the topics at hand. In such an environment, leaders cannot hide beneath their titles, and enjoy the full benefit of having hired and nurtured talent better than themselves.”
“The corporate world: where meritocracy gets disrupted If, on one hand, our early experiences introduce us to the workings of a meritocracy, in business life things get a bit hazy. It’s at work where we witness bad players playing and great players sitting on the bench, because these bad players are friends with coach; or they date the team’s first daughter; or they’ve been around for so long.”
“Many public companies with diffuse ownership, which they consider a huge handicap for company performance. Abundant and cheap debt leverage to finance their deals. Stable economic and political environments in which to base their companies, with significant geographic diversification of revenues and exogenous risk factors (inflation, interest rates, economic growth, geo-political risk, and so on).”
“The theme is also explored by Jim Collins, who coined the term Big, Hairy, Audacious Goals (BHAG), to suggest that companies that inspire their employees with a great, challenging goal, are the ones that succeed in the long run. With these lessons, the trio understood it had to attract people who are motivated by more than money: a big dream. With that in mind, Marcel Telles established Brahma’s first ever big dream: to become Brazil’s largest and best brewing company.”
“This way, the company generates an actual framework with which to make everybody “row in the same direction.” From the big dream, the company breaks down company-wide yearly goals, and then CEO goals, VP goals, Director goals, all the way down to the factory employees, who are all aligned by targets derived from the company’s Big Dream.”
“There are great advantages to having everyone sit close together with no walls between them. First of all, teams can talk to each other without having to move around the office, which increases information flow and efficiency. Brito has said he constantly holds one- to five-minute meetings with his key aides, changing topics quickly and making decisions without the need to check schedules and physically move to a meeting room with (often) a host of unnecessary people.”
“But it is what’s best, for both the company and the employee: the company will be able to promote a performer to fill the vacant role, while the employee will be able to tweak his or her career to pursue work that is a better personal fit. Still referring to poor performances, Brito states, “Yes, there will be people at the bottom. And that’s the idea; that people at the bottom feel bad, and they want to go to the top.” Letting employees know how their performance relates to their colleagues’ achievements fosters healthy competition.”
“It’s hard to know what comes first: a great pool of talent, or sharp growth. But the fact is that growth and talent must walk…”
“The backbone of a meritocracy is a performance management system backed by individualized goals and performance reviews. The performance management system has two big outputs: giving top performers the most opportunities and the most compensation, in the form of cash and stock.”
“Candor Transparency and free information flow ease decision-making and minimize conflicts. - Garantia’s 18 Commandments We believe common sense and simplicity are usually better guidelines than unnecessary sophistication and complexity. - AB InBev’s 10 Principles In big companies, only good news arrives at the top. - Carlos Brito, Endeavor CEO Summit”
“b)Companies with above-average competitive advantages Despite believing that the dream-people-culture tripod is the only truly sustainable competitive advantage, the trio still looks for companies that thrive (albeit sub-optimally) despite its absence, as we’ll see in more detail. Factors they seek could include strong brands, distribution systems, low supplier/customer concentration, and little technological disruption risk. c)Large potential efficiency gains Businesses like the manufacturing and sale of Fast-Moving Consumer Goods (FMCGs)—for instance, beers, burgers, and sauces—all carry…”
“The language and content of their management principles are also very enlightening: they praise copying what’s best instead of trying to reinvent the wheel, as well as hard work and knowing the operations firsthand.”
“Candidates are screened through multiple tests and interviews, after which they meet again, now on a more personalized basis, with top executives, who give their final sign-off on the most promising candidates. This ensures culture fit, and tips the scale towards AB InBev if the candidate has competing offers.”
“Executives often take a host of other factors into account when deciding who gets what at work: time on the job, personal ties of friendship, and loyalty to the company. But this works like a cancer, because it shows people that regardless of how much great work they produce, they are not going to be directly recognized for it. What follows is a deathly spiral, as the performance of the majority of associates degenerates significantly. The feedback loop feeds itself into an obit certificate[13]”
“Performance management: the cornerstone of a meritocracy Performance management is the ongoing cycle where the company sets expectations to itself, its teams and its employees, and monitors and measures performance against these expectations. Expectations are set in many ways: the company’s core values or principles are expectations regarding how to behave within the company (what is usually called ‘culture’). Goals are expectations of which results are expected from whom. Goals and principles are the two axes of expectations used by…”
“We like taking people out of their comfort zones. We do a lot of that; and it’s been working fine.”
“All 3G companies have strong internship and trainee programs that select, every year, a couple dozen young professionals among thousands and thousands of applicants. These trainees go on to be trained and rotated at many of the companies’ operations, and go on to assume a lot of responsibility early on. 3G companies also hire MBAs for summer internships and picks the best of them for full time positions.[11]”
“Jorge Paulo Lemann, Marcel Telles, Beto Sicupira, and their executives talk tirelessly about dreaming big: “always dream big. Big dreams and small dreams take the same effort,” Lemann says.”
“the trio believes their only really sustainable competitive advantage is their management style, they sought to chase growth by purchasing “mature businesses, with pulverized (and/or weak) ownership, strong, recognized brands and poor management,” where “external and internal owners could make a difference,” in the words of Marcel Telles. Acquisitions supplied top-line growth, and management turnaround supplied earnings growth, a combination that pleased ambitious employees and shareholders alike. Acquisitions enabled Antarctica—then AmBev and finally InBev—to export talented individuals to a number of M&A-created positions (the Brazilians secretly pride themselves in having “taken over” much of AB InBev’s management structure) around the globe. That is…”
“Retaining great people and weeding out mediocre ones But it isn’t enough to attract great people if you lose them like a leaky bucket. So retaining top talent and making sure they move up and across the company is paramount. According to Brito, great people like working for companies that have three key traits: Meritocracy: the best are recognized and the worst are driven out of the system. Informality: hierarchy is not imposed, but earned, and people can express their opinions openly without unwanted political concerns. Candor: there are no hidden agendas. Fact-based discussions and a clear notion of where people stand in the company is the rule and not the exception.”
“Not removing that bottom 10% [of worse performers] early in their careers is not only a management failure, but false kindness as well – a form of cruelty – because inevitably a new leader will come into a business and take out that bottom 10% right away, leaving them – sometimes midway through a career – stranded and having to start over somewhere else.”
