Table of Contents
Food Safety is a competitive advantage for companies who choose to invest in people, systems and technology.
In this article, we outline the following:
- Where the idea of “Food Safety is not a competitive advantage” came up.
- How Food Safety leaders can elevate the Food Safety conversation with their executive team
- How transforming your interview, assessment and hiring process can turn food safety into a huge competitive advantage.
Food Safety IS a competitive advantage
Food Safety IS a competitive advantage for companies who choose to invest in people, systems and technology.
Over the years, statements have been made to the contrary.
You can read more here if you wish and draw your own conclusion.
In my conversations with food safety executives, I haven?t found a strong bias towards the belief that food safety should not and is not a competitive advantage for companies, so I won?t belabor the point.
Personally, I think the “is or isn’t / should or shouldn’t” debate is a red herring – for industry food safety professionals, the debate distracts food safety executives from the greater personal and professional challenge they face as industry leaders.
And that is, “how can I influence my profit-minded executive team that food safety has to be factored into the core business strategy?“
Cost of Quality & Food Safety
Lone Jespersen, Principal and Founder of Cultivate, provides one, if not THE most impactful statistic a food safety executive can hammer home with their executive team to break the faulty belief that “food safety is a drain on revenue”.
In companies whose food safety program and employee behavior is singularly motivated by regulatory agencies or still siloed and “owned” by Food Safety or Sanitation(ie. “That’s their job to keep the company out of trouble”) a company’s cost of quality ranges between 12% and 20% relative to revenue.
These companies operate in what Lone defines as Level 1 to Level 3 Maturity level.
At a company’s most mature stage, Level 5, where behavior is ingrained, food safety culture is integrated into the core business strategy and everyone is willing AND encouraged to speak up when they see a problem, the cost of quality can be 6-10x less relative to current revenue.
Those numbers will catch the attention of any CEO or CFO, I assure you.
And imagine if you could get your executive team to agree that, instead of using customer complaints as a KPI, you’ll use Cost of Quality relative to annual revenue.
NOW, you’ve positioned yourself as a profit center.
And, while you may not be in food safety for the money, profit centers get paid more handsomely than cost-cutters.
My greater point is using Cost of Quality allows a food safety executive to elevate the conversation from:
“Because FSMA says we have to.”
“We can drive more profit towards innovation or capital projects.”
“we can start experimenting with ways to increase yield as we gain some stability in our quality programs.”
In any business environment, gaining efficiencies while reducing risk and waste IS a competitive advantage.
People & Food Safety as a competitive advantage
The other massive area where opportunity for competitive advantages exist is related to people and how they behave.
Lone points out another study conducted by Ashwin Srinivasan and Bryan Kurey in Harvard Business Review and points out that employees in the top quintile of companies address 46% less mistakes than their counterparts in companies in the lower quintile.
You can read the full article HERE.
Creating a culture of quality or a food safety culture or an innovation culture is not easy and…. it takes time.
So much time is spent addressing what existing employees and executives need to change about their mindsets, their behavior and how they communicate when it comes to strengthening quality and food safety cultures.
And from Lone’s experience, it can take anywhere from 3-8 years to go from Level 1 maturity stage to Level 5.
In the FDA’s walkout of the New Era of Smarter Food Safety Blueprint this week, FDA Commissioner Steve Hahn and Deputy Commissioner Frank Yiannas both promote the blueprint as one that’s laid out over a 10 year period.
Whether it’s public/private food safety partnerships or your own Food Safety programs, things take time.But according to PwC, the average CEO of 2,500 companies over the last 18 years has dropped to an average CEO tenure of 5 years. This is NOT specific to food and beverage processors however, but the broader point is CEO tenure is trending shorter, not longer.
That doesn’t leave much time to get a culture embedded that returned the Cost of Quality numbers we want to see.
And it doesn’t address how a plant worker is behaving TODAY at your plant.
On top of that, with the rise of venture-backed companies representing plant-based food and alternative protein companies, more and more founders represent a broader portion of food of the industry, many of which have come from non-consumable consumer packaged goods companies that don’t have the same nuanced obligations as a food company.
And owner/founder tenures in these companies are significantly shorter, especially when these companies commercialize, see some initial success and hit their next stage of growth.
And so even if an inbound CEO immediately set forth to impact the food safety culture, there?s no guarantee this executive could get the company to that magic level 5.
Which leaves us with a disconnect.
Address Food Safety Culture through Talent Management & Talent Acquisitions with a disconnect.
That’s why the “people” component HAS to be addressed both as a talent acquisition strategy(incoming talent) as well as a talent management(existing employees) strategy.
Using talent management to enable desired behavior and fuel your competitive advantage
Imagine for a moment a company full of people who have been enabled, trained and encouraged to walk through their plant with eyes wide open, ever vigilant for variances in data or improper and unsafe behavior.
Now imagine that behavior is a REQUIREMENT, not viewed as a “nice to have” or worse yet viewed negatively as a “spy” or a “snitch”.
Now imagine Talent Management systems in place where existing employees are given the opportunity, training and encouragement to “find their courage”.
Those that don’t find their courage and vigilance are managed into a different role or out of the company.
Seem harsh? Now imagine your sales team wouldn’t prospect or ask tough questions of prospects, wasting time with unqualified prospects and chasing unicorns that never amount to a sale.
That sales person would not last long in the company.
And companies and search firms like ours assess sales candidates for their willingness to ask tough questions and how they balance their need for approval from prospects with their desire to make a sale.
In a “mature” food safety culture, the Food Safety professional and front-line production worker are held to as high a standard as your National Account Manager when it comes to desired food safety behavior.
If you’re not addressing employees that either won’t or can’t exhibit the desired behaviors, you’ll never hit those financial gains you’re striving for.
Worse yet, you’re allowing a potentially dangerous circumstance to arise – a toxic employee who resists change and doesn’t suffer consequences.
Food Safety & Talent Acquisition – keys to your competitive advantage
Imagine that every person who came INTO the company as a new employee already had this vigilance baked into their thinking style, behavior and value systems.
Imagine if every potential employee was walked through a plant, lab or pilot facility and asked to share their observations?
Imagine if each potential employee was assessed for their courage and decision making style in tense situations?
Imagine if HR or a third party recruiter(like us) asked specific, real-life questions to test the mettle of how a potential hire would actually act in a tense situation when they were forced to show courage despite the risk of not being liked or supported.
Those that won’t, can’t or tend to be afraid to speak up aren’t hired.
Wouldn’t that be a competitive advantage?
When a Food Safety Culture clicks together in real-time
Here’s where things get interesting when a Food Safety executive influences up to the executive team, aside to their existing team and works in tandem with Talent Acquisition and Talent Management.
Imagine for a moment the following scenario.
You hired a new Supplier Quality Manager because of their no-nonsense vigilance and attention to detail.
They will represent you and company well, plus shore up supplier relationships along with their cross-functional partners.
In their first month on the job they made no bones about making a recommendation to pull the plug on a supplier who didn?t provide documentation or comply with Foreign Supplier Verification Act requirements.
Some people might have been put off, not just the supplier. Nevertheless, they persisted, pulled no punches, exhibited no fear all the while staying professional and tactful.
Imagine that Strategic Sourcing, 6 months prior, was held accountable to identify several additional backup suppliers for every ingredient category, which positioned the Supplier Quality Manager to aggressively gain compliance from a position of strength.
In this dream scenario, you’ve now addressed your supply chain and established clear expectations…with consequences for non-compliance, plus you’ve mitigated the impact of supply disruption by having a Plan B, C and D.
But, they don’t report to me!?!
A disconnect I often hear from R&D, Procurement or Quality is, “well, this or that person doesn’t report to me and I can’t get them to do what I need them to do”.
That goes away when Food Safety or any element of culture is baked into the company’s core strategy.
Using the sales analogy again, no executive would question why a sales team was continually filling its pipeline with new prospects.
No VP of Sales worth their salt would allow a sales person to become complacent with an enterprise customer’s business – they’d harp on them to keep their pipeline full with other deals.
Yet when it comes to suppliers, sourcing and quality, there isn’t that same level of vigilance.
And so when it comes time for Food Safety or Supplier Quality to exert some leverage on a supplier, operating from a position of strength(multiple options) is critical.
That’s why it’s not enough for a Food Safety leader to only focus on hiring great people for their team – to make the cross-functional departments work together towards that common goal, courage, fortitude, safety-minded qualities and a willingness to speak up has to be identified with EVERY new hire.
If you get the people part right, you’ve given yourself a chance to cut the time to embed the culture down in months, potentially years.
And that alone is great, but let’s revisit Cost of Quality.
The impact of Cost of Quality
Let’s say your CEO tenure stretches to 6 years.
If the company moves into Level 3 maturity in year 4 and eventually hits Level 5 maturity at year 6, that leaves the company operating at 2.5% cost of quality at best for 1 year.
Now imagine if you were able to accelerate that culture change to attain Level 5 in Year 4.
That?s 3 years(Year 4,5,6) at 2.5% cost of quality operating at Level 5 Food Safety Culture maturity – review Lone’s Cultivate’s Food Safety Maturity Chart here.
That?s a 10% year over year reduction in Cost of Quality for 3 years running.
Compare that against running at 12-16% Cost of Quality for those same 3 years operating at a Level 3 maturity level.
That’s a MASSIVE swing when you’re looking at 20% cost of quality at Level 1, 12% at Level 3, etc. – again, THAT’S going to catch the attention of your executive team.
More on Food Safety & Competitive Advantage
But businesses aren’t operated in a vacuum. You have competition.
And let’s say your competitor isn’t as intent as you are in pursuing a strong Food Safety Culture and/or reducing cost of quality.
This leaves them….
More susceptible to recall.
More likely to experience supply chain disruptions
More likely to take on regulatory fines
More likely to experience loss of customer goodwill
Less likely to have ancillary profits to reinvest in innovation, capital investments, etc.
Members of their sales, marketing and procurement teams will continue to cause friction against efficiency, safety and productivity.
There?s not as strong an alignment to efficiency, safety and quality across the entire company.
Because they’re not as aligned as your company is on efficiency, safety and driving down costs, the company will continue to grind their gears until something breaks.
And when something breaks, there are consequences(sickness, death, lawsuits, goodwill destroyed, etc.)
And this same company will struggle to hire people – I can personally speak of food safety professionals who have a list of companies “I will never work for” because of their reputation and leadership.
This company will suffer from turnover – no one wants to work for a company that says one thing(food safety is our #1 priority!) and does another.
And it won’t just be food safety employees – the company will struggle to compete for talent across the entire business – just as consumers demand healthier, safer, more humane, sustainable products for their families, so too do these individuals when they align their careers with an employer.
Like people “voting with their conscience”, applicants choose not to work for them specifically because their business practices threaten consumer health, employee welfare and harm the environment.
That?s YOUR competitive advantage.
Don?t be ashamed of admitting you work in a competitive environment.
And don’t be afraid of embracing quantifiable financial metrics to hold yourself and the executive team against.
They’ll appreciate it, and you won’t and don’t have to compromise your values by doing so.
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Updated August 10th, 2020