Beer Monopoly




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Posted November 2012

People are our greatest asset

Human resources |The annual office party season is upon us. In the old days, office parties at breweries were raucous affairs. Booze would flow so freely that invariably some would get so drunk that they would snog behind the filing cabinet and pass out under a desk, all the while the boss gave his usual soul-stroking speech about “we are all a big family here”. Did anybody honestly believe him? For the most part, probably not. Fast-forward twenty years and it has become even more of a cliché, rendered hollow by brewers’ changing corporate cultures.

Let’s start with a quick survey. Sit back, take a deep breath to slow down your pulse and then answer the question: which of the following two statements rings more true to you? Answer quickly. Don’t chew on it.

  1. The purpose of business is to make its employees happy

  2. The purpose of employees is to make business happy

Make a note of your answer. Now let’s discuss it. I guess that you chose #1. Maybe not because you find it convincing, but because #2 seems so ludicrous. Of course, people do serve more purposes than being mere cogs in the economy, don’t they? Because to think otherwise would be an insult to our deepest held beliefs.

Still, your qualms point to a pertinent issue. What is the Image of Man (read human beings) in western brewing corporations? I know that’s a big question and one not usually discussed on the shop floor. So I will rephrase it: how do brewing companies view their people? Do they think of them as corporate soldiers, who tick off boxes and do as they are told for which they get paid well? More to the point: the HR executive who reportedly said “I want employees, not humans beings” - is he a nasty person or just frightfully frank? This is a question for the guys over in HR, who I fear might be hard pressed for an answer. It’s also a question for their bosses since it was them, or their predecessors, who at some stage in the past 30 years decided to transform their erstwhile Personnel Departments into Human Resources Departments. This was more than a Freudian slip, albeit a highly revealing one. Many will remember that with it came a change in HR function so profound that when you read the HR trade magazines, in which barrel-chested HR executives boast of their strategic leadership acumen, you could get the idea that HR managers will soon become the kingmakers in big corporations (after the marketing gurus in the 1970s, the finance guys in the 1980s and the M&A wizards in the 1990s).

Human Resources is a term most brewing industry veterans – the ones who still hold jobs in the industry – really take objection to. What brings their blood to the boil is the word “resources”. They insist that people are different from spare parts. Therefore they need to be treated and managed differently. However, what annoys them even more is the mumbo jumbo about “people being our most valuable asset” that no corporate social responsibility (CSR) report can do without these days. They think that this is a bleeding lie because it is meant to conceal the fact that corporations view human beings as means to an end rather than as means in themselves.

If you don’t stop the veterans’ rant there and then, they will next mention Tony van Kralingen’s appointment in 2008 as supply chain and human resources director for the SABMiller group. Wasn’t that the clearest indication yet, they huff and puff, that for those in the executive suite employees rank as lowly as a piece of machinery? Don’t they treat people like interchangeable parts only to try and engineer the human factor out of corporate processes? Before their blood pressure hits the ceiling I usually butt in that, actually, Mr van Kralingen is the only director among his industry peers to hold both roles, which is why he cannot really vouchsafe for such a sweeping statement. True, his background is in HR. But in the course of his long career with SABMiller he also managed a line business as Managing Director and Chairman of SABMiller’s South African division (SAB). And, come to think of it, there are a few other explanations possible as to why he took on dual responsibilities. Perhaps nobody else on SABMiller’s board volunteered to look after HR. Also it cannot be ruled out the procurement part has given Mr van Kralingen a bigger clout in SABMiller “than the average HR exec, who is all too often seen as having little impact on the bottom line, and therefore, given little voice in major company decisions”, as one blogger wrote upon his appointment.

Besides, at board level, he is probably so far removed from the day-to-day running of the business that he does not have to worry about being the “bad guy” all the time – a title he would no doubt have earned by suppliers and unions if he served in dual capacities further down the line. Alas, we shall never know what prompted SABMiller to give him this portfolio because when Brauwelt International asked the company for a comment they refused to reply.

To get back to my initial question: are human beings for business an end in themselves or really a means to an end? Those who ticked #1 unfortunately got it wrong. Academic HR literature suggests that in modern corporations human beings are indeed seen as a means to an end. Full stop. They are regarded as a valuable, but expensive resource, never mind that in brewing companies the cost of human labour as a share of total costs is often lower than the cost of marketing and packaging. So rather than calling CSR a great lie, I think that to the contrary all those CSR initiatives are an honest admission that human beings are a precious resource whom the bossmen hope to keep happy and productive … yes, you guessed right, by signing off all those costly CSR initiatives.

Admittedly, there is a logical flaw in the analogy of people and machinery as similar, yet different, kinds of resources. People, unlike things, can walk out of the door. I suspect this is one of the reasons, perhaps not the major one, why brewing companies in the past decade have increasingly standardised their processes. Today, if you talk to people in the beer industry, all they talk about is planning, KPIs, and budgeting. Which has made me wonder: what’s happened to beer?

It’s a given that plans provide the basis for running a successful business. But they should not be idolised. Unfortunately, this is very often the case. Brewing companies these days seem obsessed with measurement. Aided by highly effective IT-systems, they have evidently fallen to worshipping the data fetish. “If it moves, measure it. If not, paint it,” Mr Van Kralingen was once quoted as saying. According to Carlos Laboy, the intensity of benchmarking and accountability at a company like SAB is astounding. People know what is expected of them at every point along the way in terms of setting goals and achieving tangible results. Although teamwork is encouraged, individual accountability is paramount … not least because of individual target agreements and performance reviews, which in turn inform complex rewards and incentive systems. By the way, Mr Laboy is a Wall Street analyst and this is the gist of what he told South African media after visiting SAB in 2005. The final bit of the previous sentence is my addition. At the time, Mr Laboy spoke highly approvingly of SAB. Nevertheless, I think it’s safe to say that his observations apply to all global brewing companies to varying degrees.

Sorry for sounding like Percy Pedantic, but to me, the logic (sic) behind all this planning and measuring smacks of plain old Taylorism (Frederick Taylor 1856 – 1915). More than a century ago, Taylor formulated the principles of “scientific management” for the big corporations of the Industrial Age, which, incidentally, were soon taken up by capitalist as well as centrally planned economies (eg the Soviet Union). The central idea behind Taylor’s scientific management is a cold and distant view of people as exchangeable parts of a machine. If you thought Taylorism was a thing of the past, which went down together with the Eastern Bloc countries, then think again. Actually, in its current manifestation it is often jokingly called “SAP” and sits comfortably inside the Trojan horse of capitalism which carries it right across cross numerous sectors of our modern economy, thus debunking the myth that modern management is all about engagement and empowerment.

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