A taste for innovation

The global flavour company McCormick uses cross-functional, self-governing employee boards to help identify business process improvements and other innovations. Along the way, board members pick up leadership, communication and analysis skills, among others. Ken Kelly, CPA, CGMA, senior vice president and corporate controller, explains how it works.
Ken Kelly, CPA, CGMA
Ken Kelly, CPA, CGMA

McCormick & Co. is a century-old company that has built its reputation and fortunes on spices. But in some circles, it has become known for the ingredients it uses to encourage innovation in its ranks.

“Innovation isn’t always seen as a strength within the financial organisation,” said Ken Kelly, CPA, CGMA, McCormick’s senior vice president and corporate controller. “But it needs to be. Our vision and mission for finance at McCormick is that we create value and insight balanced by control in everything we do.”

Emphasis on innovation — one of McCormick’s five shared core values, along with high performance, ethical behaviour, teamwork and concern for fellow employees — has helped the company survive and thrive.

In 1932, the US was mired in the Great Depression, and Maryland-based McCormick had lost money three years in a row. So C.P. McCormick, the company’s president at the time, developed a recipe for problem-solving and innovation: a participatory management initiative, served up by a series of cross-functional employee groups called Multiple Management Boards.

He launched the idea along with other human capital initiatives that were atypical for a Depression-era workplace in the US.

“He gathered all the employees together — which, No. 1, was an innovation — and basically said: ‘Listen, you’re one of my most important assets. We need to work as a team and get better here,’ ” Kelly said. “He raised salaries by 10% and shortened the workweek from 56 hours to 48 hours.”

The result: “People started to work as teams to actually increase that productivity,” Kelly said. “They felt they were more empowered.”

Today, McCormick is a $4 billion business, known for Schwartz spices in the UK, Ducros in France and brands such as Zatarain’s and Lawry’s in the US. Forty per cent of its business comes from industrial clients such as PepsiCo’s Frito-Lay. And the cross-functional boards live on.

How multiple management works

In 2012, McCormick had 13 Multiple Management Boards at locations around the world, as well as three regional bodies and one global board. A sampling of the boards’ notable outputs includes:

  • A recommendation to improve a major unit’s customer relationships, effectiveness and processes to work seamlessly across country boundaries.
  • Recommendations on a range of halal products to be sold in North Africa.
  • Various HR projects including the development of a corporate summer intern strategy and programme and new employee cultural orientation.
  • Research, benchmarking and recommendation of a pilot shared-services organisation within the company.
  • Development of a natural disaster/disruptions continuity/management plan for the company’s largest manufacturing site.

Any employee can sign up to serve on one of the boards. “You’ve got finance people and production people and marketing people and legal,” Kelly explained. “Everybody is the same on that board, and you’ve got people from all different levels” of the business.

Participants go through an orientation process. “They then will tackle an issue, of which they may have an expertise or not. They then will give an output,” he said.

While pumping ideas into the pipeline, the boards create key human capital by-products, including stronger employee engagement and career development. “You’re networking, you’re working within a group to solve an issue,” Kelly said.

“We’re teaching leadership, we’re teaching collaboration and also a broader knowledge of the processes and the business.”

Employees signing on to one of the boards get an additional two weeks of paid time off and a supplement in their pay roughly equal to two weeks’ salary. In several countries, there are backlogs of employees interested in serving, while smaller units see less demand.

Board participants are expected to take turns leading projects, and everyone in the group delivers a presentation, which is evaluated by others on the board. The boards are self-governing. Members elect a chairman and other officers, and the boards reconstitute every six months. Members evaluate others on the board, ranking their contributions and skills and giving constant feedback. Each term there must be 20% turnover of the board, which may be by a combination of retirement, withdrawal or dropping the lowest-ranked members. Those who withdraw or are dropped can later apply to serve again.

Some of the board projects have measurable financial benefits, Kelly said, while others, such as research, are less tangible. But each project is mapped to the objectives of the organisation, and project charters spell out the skills needed to get the task done and the benefit of the project for the company.

“It’s rewarding,” Kelly explained. “But it’s demanding.”