Its a tough time in the brewing industry, but Colin Povey, Carlsberg-Tetleys new CEO, has high hopes for the companys future and talks to Steve Smethurst about the challenges he faces in the coming months
Funnily enough a few days later, his parent company, Carlsberg A/S, announces a 2.8% drop in UK first-quarter sales. The Danish matriarch takes a dim view. Below expectations, it notes sternly. But there are extenuating circumstances relating to the UK dip in sales, not least the dearth of tourists in the early part of the year due to the disastrous foot-and-mouth outbreak.
So perhaps the CEO need not break out into a rash just yet, particularly since the UK subsidiary is not actually a listed company in its own right. His main brands Carlsberg (probably the best lager in the...) and Tetley bitter should recover through the year as the tourists return, to improve on the 23 pints of Carlsberg that are currently sold in the UK every second.
Povey, quite a rarity in the UK as an HR director promoted to this exalted level, should at least have been temporarily cheered by news in The Times on the same day as the quarterly figures were announced, that alcohol saves 10,000 more lives a year in Britain than it costs. It reasons that if everyone stopped drinking, deaths would increase by a significant 0.9% among women and by an amazing 2.8% among men.
But even this story has a nasty kick to it. The report by researchers at the London School of Hygiene and Tropical Medicine argues that men should have a zero drinking policy until the age of 35. And, unfortunately for Povey, pretty much the entire Carlsberg-Tetley marketing strategy is focused on men well under the age of 35 as its widely recognised that 18-24-year-olds are the most enthusiastic beer drinkers in the UK.
Povey, a CEO by the age of 40, joined Carlsberg as HR director in 1995 having been recruited from Thames Water. Ive always worked in businesses where HR has been integral, he says, by way of explanation of his upwardly mobile career path. From early on, Ive been on the board or reported to the CEO Ive always been exposed to business issues. Ive never seen myself as just an HR guy. Since 1997, Ive had operational elements to my role such as retail, distribution, corporate communications and property disposals my portfolio was a real mixed bag. Im probably unusual in that most of my HR experience has been in business and change projects.
Educated at Lancaster Royal Grammar School and then Liverpool University, Povey is certainly more Tetley than Carlsberg in the way that he talks. You have the choice, he says bluntly, as he explains how hes learned the hard way, you can either sit in the corner and say nowt, or you can get involved. You learn quickly because you get blown out of the water if you cant argue your case.
He recalls that an early influence on him was Dick Marshall at Thames Water. He was a very good networker around the top team, a real decision-maker and very good at change. But the key thing that Povey values from him was that he never allowed himself to be on the outside looking in.
And if you ask Povey what he thinks of HR in general, you get an equally interesting answer. In a lot of companies, he says, HR is a quasi-welfare function. The business makes money and it feels it ought to do something, but it has no idea why or where HR can add any value.
Povey is particularly scathing of the financial services industry where HR directors often earn 100,000 a year. Were talking big, sexy packages, he says, and what do they do? Housekeeping. They pay way over the odds.
Businesses of the future, he feels, will either be very small and nimble or become progressively international in outlook. For the latter, he argues that HR people will need to understand and lead change; understand team dynamics; have a strong focus on a values set; good communication skills; and the ability to blend people and teams together.
His message to HR directors is refreshing. Our time is coming, he says, if you look at the FTSE CEOs, they are either ex-finance, ex-marketing or ex-HR. And you know which is the smallest number but at one time ex-marketing directors looked good, but when the time came to squeeze costs, FDs looked the most effective. Yet Povey will argue and he offers us a pound to a penny that the 10 most profitable businesses in the world have strong values, a people focus and are good at change. To be successful, you need to understand numbers, but you dont need to be a finance director to do this. If you do the right things right, the profits will take care of themselves, he says, with great certainty. He reveals that he thinks the ideal cocktail for an HR director is 40% business knowledge, 40% change ability and 20% HR toolkit. You need to understand business, customers and the marketplace, he says, as well as act as a catalyst for change. Skills in organisational development, remuneration and communication are also particularly useful when you reach CEO level. His only fear is that good HR people are scarce, with a lot of the best ones going into consultancy thanks to the significant fees that can be charged.
Hes equally forthcoming on his challenge at Carlsberg-Tetley. Going back to when he joined the company, he says the business had a clear understanding of the need to change and there was a desire at the top to change, but perhaps less of an understanding of which levers to pull. There was the joint venture between Carlsberg and Allied Domecq, and three years after the joint venture, they still werent biting the bullet. An outsider could probably see it more clearly, he says modestly.
When I joined, I met every single executive in the business, he says, and within the first five minutes, everyone told me whether they were an Allied man or a Tetley man. People had a very strong sense of values the attitude you would get was that this would be a really good company if only you comedians would stop fucking it up.
The company brought in changes to slim the organisation down and the top team has changed completely over the past six years. It has certainly had difficult times, especially the period 1995-97 when it was closing sites. We had a number of operational issues, says Povey, but to be honest, the number of letters of complaint we had about the closures I can probably count on the fingers of one hand.
Weve got a lot going for us as an employer. Our salary and benefits are very competitive and we handle major change in the right way we dont shaft people. Those that are casualties, wed hope we manage in a good way.
When asked about industrial relations, Povey is candid. Weve worked very closely with the trade unions to foster collaborative relationships and weve still got a lot of work to do. I would probably describe our agreements as 20th century, rather than 21st. But there has been a definite improvement he says. We certainly dont get, Piss off mate, youre joking any more, he smiles.
He reveals that Carlsberg-Tetley ran an employment-attitude survey in late 1997 and got a 60% to 70% rating as a good employer. It was nothing short of remarkable, says the new CEO in some disbelief. At the time of this interview, he was preparing himself for the results of the 2001 survey. Id be happy to beat the 1997 figure, he says. In fact, his guard slipping for a moment, Ill be happy if we dont go backwards.
Its a tough time in the brewing industry. The market trends are moving supplies from on-trade to off-trade and the day before the interview, he had been at a suppliers conference held by Tesco such is the importance of the off-trade. Unfortunately, margins are less in off-trade than in the pubs. Much of Poveys time since January has been spent getting close to the customers, I knew some names and faces, he says, mostly from knowing where the money flowed to. What I havent had in the past is much experience of direct customer negotiations. And for most HR directors who fancy their chances of becoming CEO, this is likely to be a gap on their cvs too.
There is also a move from standard to premium brands for Povey to consider the big brands are getting bigger at the expense of the rest and theres also global expansion as UK brands become worldwide brands. Another problem, says Povey with a grin, is that drinkers are becoming more promiscuous. He pauses, I mean in terms of brand loyalty. What this means is that young drinkers are not going to be an exclusively Carlsberg drinker, theyll be just as likely to drink pints of Guinness or Bacardi Breezers.
So will we ever see Povey, an ex-international water-polo player who still plays rugby union, with a pint of Guinness in his hand after a match? Only when were making shed-loads of money, he laughs, so no, not at the moment.
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