May 27, 2020

Total Performance Leadership Blog Post #17: Stakeholder Engagement-Above & Beyond

By Rob Andrews

When I met Eric Claus, the former CEO of Save a Lot, I knew instantly that I had a new friend. Eric is a major league superstar with twenty years of CEO experience. A non-bureaucratic leader with an eye for good people, always inspiring the loyalty and respect of the troops, Eric’s track record is nothing short of amazing. Eric is a superstar by anyone’s definition.

Eric was hired by SuperValu in 2015 as CEO of Save a Lot, a $4.5 billion retailer with 1,400 corporate and licensed stores operating in 37 states and the Caribbean. His mandate was to stabilize the company, create and lead with a new strategic vision, all with a view to sell the company and transition it to private equity. Eric led the company through the sale (realizing $1.4 Billion USD). He then oversaw the separation process from its parent, ensuring a successful and smooth transition to the new private equity owners. Under Eric’s leadership, all this was accomplished in 16 months.

Eric served as President and CEO of The Great Atlantic & Pacific Tea Company (A&P – $10 billion publicly traded retailer on the NYSE from 2004 – 2009 and was the first CEO in two decades to consistently improve top and bottom-line results every year. He did so by developing a very creative strategic plan, transforming the company from a banner driven conventional retailer to a format driven and focused company, including Discount, Price Impact, Fresh, and Gourmet. Eric significantly changed the company’s historic trends and grew top and bottom line consistently 4 years straight (grew EBITDA by $218 million between 2004-2008), successfully divested of all non-core market assets, and acquired and integrated an in-market, $4 billion supermarket chain.

As President & CEO of A&P Canada from 2002 to 2005, he managed the $4.4 billion supermarket chain through turbulent times while achieving record profitability and spearheaded the sale of the company for $1.7B to Metro Richelieu, a Quebec based food retailer.

As CEO of CO-OP Atlantic, from 1997-2002, a $500 million regional co-op with operations in supermarkets, feed-mills, poultry processing, gas bars, senior’s housing, and home heating oil operations, steered the business from the brink of bankruptcy to sustained profitability, creating a “buy local” strategy that created sustainability by integrating all facets of the business from feed to poultry to supermarkets and gasoline.

Eric Claus joined us for his second call to weigh in on our study after having had a chance to study the architecture and a few of our cases. He began by saying he was really drawn to the theory and strategy behind the study, dialogue, and architecture.

“It’s exactly how I think. I almost feel like I am one of the teams that wrote the principles of TPL, as they are exactly what I have always adhered to. The first thing that caught my eye was TPL’s approach to purposeful hiring, which is where it all starts. This is the most amazing hiring model I’ve seen. Throughout my career I have been drawn to problem situations that required major change, to achieve turnaround and success. In almost all cases, I found leadership to be the problem. It all starts with people and culture. This is what so many PE and other firms miss when taking over or managing a company. Great numbers are almost always delivered by teams that have vision, concept, and a real people culture, one that is inclusive and demonstrates genuine caring and respect.

It doesn’t start with financial statements; great financials are the result of great teams. I have always been amazed, when taking on a new company challenge, at how many talented individuals have been silenced and put in a box, where their initiative and creativity has been stifled. I have been equally amazed, particularly by PE firms, at how quickly they can also destroy a good company by not embracing the most basic people and listening skills. What TPL professes, and I’m a testament to its success, is that when you inclusively develop a path and a vision and embrace the nine managing principles with all your stakeholders, it can only result in financial and human success. Doing what’s right for the company, means respecting and empowering your teams in order to engage them, and over deliver on customer expectations. That mindset and culture will drive superior performance and deliver the end game that most investors are looking for.

Short-term performance is important. Ironically, however, single-minded short-term focus on shareholder gains usually results in dramatically diminished shareholder returns. When Jim Sinegal, the founder, and CEO of Costco, was managing through the great recession, he committed to maintain his staffing levels, and his best pricing policy for his customers, knowing full well that his short-term profitability would suffer. He had vision and courage and knew that in the end, it would pay off, and it did.

Driving performance through people and culture makes all the difference in the world. I love the case study of QuikTrip, because of the way Chet Cadieux thinks, is the way I, and all exceptional leaders, think. I admire the way Chet spends time with people in his stores and not just the managers. I believe in going to the cafeteria with all the rank and file employees and having lunch with them. That’s where the rubber meets the road.

I’m always amazed at how many leaders completely miss the simple little things that make associates want to work for a company and how insensitivity can completely disengage what should be motivated and engaged associates. That’s one very big reason that the TPL OHI is so critically important. As busy as we all are, it’s easy to think all is well, while we’re doing things to our cultures, we are completely unaware of.

A perfect example of this is my youngest son’s employment situation. He was working for a large big box U.S. based retailer in Canada. They were anticipating an announced visit from the new company CEO from the U.S. They were very excited about the upcoming visit and had the store all polished up. When the CEO arrived for his store visit, he did not acknowledge any of the rank and file employees. He actually leaned across a woman working at checkout, without acknowledging her, in order to shake a manager’s hand. My son and the other rank and file associates who had all worked so hard to prepare for the visit and were all so eager to meet the new boss were completely disappointed, discouraged, and instantly disengaged. The new CEO missed a golden opportunity to engage the team, especially so that talented young people want to work for the company and move up the ranks. If senior leaders understood how much engagement one can get from of a workforce, simply by managing inclusively and respectfully, I think that you would find much less bad behavior. Talking to and showing interest in people on the front lines matters.

Lastly, I’d like to share with you one of my favorite quotes from Michael Jordan, “talent wins games, teamwork and intelligence wins championships”